Analyzing Celgene (CELG) and Valeant Pharmaceuticals International (VRX)

Celgene (NASDAQ: CELG) and Valeant Pharmaceuticals International (NYSE:VRX) are both mid-cap healthcare companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, valuation, earnings and profitability.

Insider and Institutional Ownership

80.2% of Celgene shares are held by institutional investors. Comparatively, 49.5% of Valeant Pharmaceuticals International shares are held by institutional investors. 1.0% of Celgene shares are held by insiders. Comparatively, 5.9% of Valeant Pharmaceuticals International shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Celgene has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500. Comparatively, Valeant Pharmaceuticals International has a beta of -0.4, meaning that its stock price is 140% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Celgene and Valeant Pharmaceuticals International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Celgene 1 9 18 1 2.66
Valeant Pharmaceuticals International 3 11 5 0 2.11

Celgene presently has a consensus price target of $139.69, suggesting a potential upside of 38.54%. Valeant Pharmaceuticals International has a consensus price target of $17.33, suggesting a potential upside of 3.48%. Given Celgene’s stronger consensus rating and higher probable upside, research analysts plainly believe Celgene is more favorable than Valeant Pharmaceuticals International.

Earnings & Valuation

This table compares Celgene and Valeant Pharmaceuticals International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Celgene $11.23 billion 7.07 $2.00 billion $4.24 23.78
Valeant Pharmaceuticals International $9.67 billion 0.60 -$2.41 billion $3.90 4.29

Celgene has higher revenue and earnings than Valeant Pharmaceuticals International. Valeant Pharmaceuticals International is trading at a lower price-to-earnings ratio than Celgene, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Celgene and Valeant Pharmaceuticals International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Celgene 27.36% 63.80% 17.45%
Valeant Pharmaceuticals International 15.35% 51.56% 5.14%

Summary

Celgene beats Valeant Pharmaceuticals International on 14 of the 15 factors compared between the two stocks.

About Celgene

Celgene Corporation is an integrated global biopharmaceutical company. The Company, together with its subsidiaries, is engaged in the discovery, development and commercialization of therapies for the treatment of cancer and inflammatory diseases through solutions in protein homeostasis, immuno-oncology, epigenetics, immunology and neuro-inflammation. Its commercial-stage products include REVLIMID (lenalidomide), POMALYST/IMNOVID (pomalidomide), OTEZLA (apremilast), ABRAXANE (paclitaxel albumin-bound particles for injectable suspension), VIDAZA, azacitidine for injection (generic version of VIDAZA) and THALOMID (thalidomide). Its clinical trial activity includes trials across the disease areas of hematology, solid tumors, and inflammation and immunology. The Company also markets ISTODAX, which is an epigenetic modifier. The Company is also evaluating AG-221 (enasidenib) in combination with VIDAZA in newly diagnosed acute myeloid leukemia with isocitrate dehydrogenase-2 mutations.

About Valeant Pharmaceuticals International

Valeant Pharmaceuticals International, Inc. is a pharmaceutical and medical device company. The Company is engaged in developing and marketing a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices). It operates through two segments: Developed markets and Emerging markets. In the Developed Markets segment, it focuses on the areas of dermatology, neurology, gastrointestinal disorders, and eye health therapeutic classes. In the Emerging Markets segment, it focuses on primarily on branded generics, OTC products and medical devices. Its pharmaceutical products include Xifaxan, Solodyn and Glumetza. Its OTC products include PreserVision, Biotrue and Boston. Its other generic products include Latanoprost and Metronidazole. Its ophthalmic surgical products include intraocular lenses, such as Akreos, enVista, Crystalens and Trulign.

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