Financial Analysis: Emergent Biosolutions (EBS) and Horizon Pharma (HZNP)

Emergent Biosolutions (NYSE: EBS) and Horizon Pharma (NASDAQ:HZNP) are both medical companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Insider & Institutional Ownership

88.4% of Emergent Biosolutions shares are held by institutional investors. Comparatively, 86.6% of Horizon Pharma shares are held by institutional investors. 16.5% of Emergent Biosolutions shares are held by company insiders. Comparatively, 3.2% of Horizon Pharma shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Emergent Biosolutions and Horizon Pharma’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Emergent Biosolutions $488.78 million 3.98 $51.77 million $1.69 27.78
Horizon Pharma $981.12 million 2.48 -$166.83 million ($3.05) -4.87

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

Volatility & Risk

Emergent Biosolutions has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Horizon Pharma has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Profitability

This table compares Emergent Biosolutions and Horizon Pharma’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emergent Biosolutions 15.60% 15.20% 9.67%
Horizon Pharma -45.28% 20.22% 5.35%

Analyst Ratings

This is a summary of current ratings and price targets for Emergent Biosolutions and Horizon Pharma, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emergent Biosolutions 0 1 2 0 2.67
Horizon Pharma 0 2 9 0 2.82

Emergent Biosolutions currently has a consensus target price of $45.00, suggesting a potential downside of 4.13%. Horizon Pharma has a consensus target price of $18.64, suggesting a potential upside of 25.41%. Given Horizon Pharma’s stronger consensus rating and higher possible upside, analysts plainly believe Horizon Pharma is more favorable than Emergent Biosolutions.

Summary

Emergent Biosolutions beats Horizon Pharma on 8 of the 14 factors compared between the two stocks.

About Emergent Biosolutions

Emergent BioSolutions Inc. is a life sciences company. The Company focuses on protecting and enhancing life by providing specialty products for civilian and military populations that address accidental, intentional and naturally emerging public health threats. It focuses on developing, manufacturing and commercializing medical countermeasures that address public health threats (PHTs). The PHTs operates through two categories: Chemical, Biological, Radiological and Nuclear, as well as explosive-related threats and emerging infectious diseases. It operates through four business units: Vaccines and Anti-infectives; Antibody Therapeutics; Devices, and Contract Manufacturing. Vaccines and Anti-infectives business unit consists of BioThrax, which is for the general use prophylaxis and post-exposure prophylaxis of anthrax disease. Devices business unit consists of marketed products, such as Reactive Skin Decontamination Lotion Kit (RSDL) and Trobigard (atropine sulfate, obidoxime chloride).

About Horizon Pharma

Horizon Pharma Public Limited Company is a biopharmaceutical company. The Company is focused on identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. As of December 31, 2016, the Company marketed 11 medicines through its orphan, rheumatology and primary care business units. The Company’s marketed medicines are ACTIMMUNE (interferon gamma-1b), BUPHENYL (sodium phenylbutyrate) Tablets and Powder, DUEXIS (ibuprofen/famotidine), KRYSTEXXA (pegloticase), MIGERGOT (ergotamine tartrate & caffeine suppositories), PENNSAID (diclofenac sodium topical solution) 2% weight per weight (w/w), or PENNSAID 2%, PROCYSBI (cysteamine bitartrate) delayed-release capsules, QUINSAIR (aerosolized form of levofloxacin), RAVICTI (glycerol phenylbutyrate) Oral Liquid, RAYOS (prednisone) delayed-release tablets and VIMOVO (naproxen/esomeprazole magnesium).

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