Analyzing InVitae (NVTA) and Vermillion (VRML)

Vermillion (NASDAQ: VRML) and InVitae (NYSE:NVTA) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Insider and Institutional Ownership

34.9% of Vermillion shares are owned by institutional investors. Comparatively, 66.5% of InVitae shares are owned by institutional investors. 3.7% of Vermillion shares are owned by insiders. Comparatively, 9.9% of InVitae shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Vermillion and InVitae’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vermillion $2.64 million 43.41 -$14.96 million ($0.20) -9.55
InVitae $25.05 million 17.35 -$100.25 million ($2.55) -3.22

Vermillion has higher earnings, but lower revenue than InVitae. Vermillion is trading at a lower price-to-earnings ratio than InVitae, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for Vermillion and InVitae, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vermillion 0 0 1 0 3.00
InVitae 0 0 3 0 3.00

Vermillion currently has a consensus target price of $2.25, indicating a potential upside of 17.80%. InVitae has a consensus target price of $14.33, indicating a potential upside of 74.58%. Given InVitae’s higher probable upside, analysts clearly believe InVitae is more favorable than Vermillion.

Profitability

This table compares Vermillion and InVitae’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vermillion -332.10% -200.44% -114.50%
InVitae -206.95% -115.25% -67.79%

Summary

InVitae beats Vermillion on 8 of the 11 factors compared between the two stocks.

About Vermillion

Vermillion, Inc. is a diagnostic service and bio-analytic solutions provider. The Company is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. It sells OVA1 risk of malignancy test for pelvic mass disease (OVA1). OVA1 is a blood test designed to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at risk of having a malignant ovarian tumor prior to planned surgery. It developed OVA1 through pre-clinical studies in collaboration with various academic medical centers encompassing over 2,500 clinical samples. OVA1 is validated in a multi-center clinical trial encompassing approximately 30 sites reflective of the diverse nature of the clinical centers, at which ovarian adnexal masses are evaluated. Its ASPiRA LABS is a laboratory that provides diagnostic services using a biomarker-based diagnostic algorithm to inform clinical decision making and personalized treatment plans.

About InVitae

Invitae Corporation utilizes an integrated portfolio of laboratory processes, software tools and informatics capabilities to process deoxyribonucleic acid (DNA)-containing samples, analyze information about patient-specific genetic variation and generate test reports for clinicians and their patients. As of December 31, 2016, the Company’s products consisted of assays totaling over 1,100 genes that could be used for multiple indications, including hereditary cancer, neurological disorders, cardiovascular disorders, pediatric disorders and other hereditary conditions. The Company offers panels for a range of hereditary conditions in cancer, cardiology, neuromuscular, pediatric and rare diseases. The Company focuses on genetic testing, genome network and genome management. The Company offers full gene sequencing and deletion/duplication analysis as a standard for all of its tests. The Company holds interests in AltaVoice, a patient-centered data company.

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