Teva Pharmaceutical Industries (NYSE: TEVA) and Tetraphase Pharmaceuticals (NASDAQ:TTPH) are both healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Profitability

This table compares Teva Pharmaceutical Industries and Tetraphase Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Teva Pharmaceutical Industries -24.35% 15.70% 5.12%
Tetraphase Pharmaceuticals -1,382.33% -88.27% -77.53%

Earnings and Valuation

This table compares Teva Pharmaceutical Industries and Tetraphase Pharmaceuticals’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Teva Pharmaceutical Industries $21.90 billion 0.70 $329.00 million ($5.87) -2.57
Tetraphase Pharmaceuticals $5.14 million 58.42 -$77.48 million ($2.86) -2.04

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

Dividends

Teva Pharmaceutical Industries pays an annual dividend of $0.72 per share and has a dividend yield of 4.8%. Tetraphase Pharmaceuticals does not pay a dividend. Teva Pharmaceutical Industries pays out -12.3% of its earnings in the form of a dividend.

Volatility and Risk

Teva Pharmaceutical Industries has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500. Comparatively, Tetraphase Pharmaceuticals has a beta of 2.51, indicating that its share price is 151% more volatile than the S&P 500.

Institutional and Insider Ownership

52.1% of Teva Pharmaceutical Industries shares are owned by institutional investors. Comparatively, 58.2% of Tetraphase Pharmaceuticals shares are owned by institutional investors. 7.1% of Teva Pharmaceutical Industries shares are owned by insiders. Comparatively, 5.5% of Tetraphase Pharmaceuticals shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Teva Pharmaceutical Industries and Tetraphase Pharmaceuticals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Teva Pharmaceutical Industries 5 15 6 0 2.04
Tetraphase Pharmaceuticals 0 1 4 0 2.80

Teva Pharmaceutical Industries currently has a consensus price target of $21.22, suggesting a potential upside of 40.90%. Tetraphase Pharmaceuticals has a consensus price target of $17.00, suggesting a potential upside of 191.10%. Given Tetraphase Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts plainly believe Tetraphase Pharmaceuticals is more favorable than Teva Pharmaceutical Industries.

Summary

Teva Pharmaceutical Industries beats Tetraphase Pharmaceuticals on 9 of the 15 factors compared between the two stocks.

About Teva Pharmaceutical Industries

Teva Pharmaceutical Industries Limited is a pharmaceutical company. The Company is engaged in developing, producing and marketing generic medicines and a portfolio of specialty medicines. The Company operates through two segments: Generic medicines and Specialty medicines. The Company develops, manufactures and sells generic medicines in a range of dosage forms, including tablets, capsules, injectables, inhalants, liquids, ointments and creams. Its specialty medicines business focuses on delivering a range of solutions to patients and providers through medicines, devices and services in various regions and markets around the world. Its specialty medicines business includes its core therapeutic areas of central nervous system (CNS) and respiratory medicines with a focus on asthma and chronic obstructive pulmonary disease. It also has specialty products in oncology, women’s health and selected other areas.

About Tetraphase Pharmaceuticals

Tetraphase Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company uses its chemistry technology to create antibiotics for multidrug-resistant infections. The Company is developing its lead product candidate, eravacycline, a fully synthetic tetracycline derivative, as a spectrum intravenous (IV) and oral antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including multidrug-resistant gram-negative infections. The Company also develops TP-6076 for multidrug-resistant gram-negative infections. Eravacycline is a fluorocycline antibiotic. The Company is conducting a global Phase III clinical program for eravacycline called Investigating Gram-Negative Infections Treated with Eravacycline (IGNITE). TP-271 is a fully synthetic fluorocycline being developed for respiratory disease caused by bacterial biothreat pathogens in healthy volunteers.

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