Tetraphase Pharmaceuticals (NASDAQ: TTPH) and Abbott Laboratories (NYSE:ABT) are both healthcare companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitability, analyst recommendations, valuation and risk.

Analyst Ratings

This is a summary of current recommendations for Tetraphase Pharmaceuticals and Abbott Laboratories, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tetraphase Pharmaceuticals 0 1 4 0 2.80
Abbott Laboratories 0 2 13 0 2.87

Tetraphase Pharmaceuticals presently has a consensus target price of $17.00, suggesting a potential upside of 168.56%. Abbott Laboratories has a consensus target price of $60.53, suggesting a potential upside of 2.62%. Given Tetraphase Pharmaceuticals’ higher possible upside, research analysts plainly believe Tetraphase Pharmaceuticals is more favorable than Abbott Laboratories.

Profitability

This table compares Tetraphase Pharmaceuticals and Abbott Laboratories’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tetraphase Pharmaceuticals -1,382.33% -88.27% -77.53%
Abbott Laboratories 8.37% 13.98% 6.09%

Dividends

Abbott Laboratories pays an annual dividend of $1.06 per share and has a dividend yield of 1.8%. Tetraphase Pharmaceuticals does not pay a dividend. Abbott Laboratories pays out 87.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Abbott Laboratories has increased its dividend for 44 consecutive years.

Institutional and Insider Ownership

58.2% of Tetraphase Pharmaceuticals shares are held by institutional investors. Comparatively, 71.2% of Abbott Laboratories shares are held by institutional investors. 5.5% of Tetraphase Pharmaceuticals shares are held by company insiders. Comparatively, 0.8% of Abbott Laboratories shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Tetraphase Pharmaceuticals and Abbott Laboratories’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tetraphase Pharmaceuticals $5.14 million 63.32 -$77.48 million ($2.87) -2.21
Abbott Laboratories $20.85 billion 4.92 $1.40 billion $1.21 48.75

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

Volatility and Risk

Tetraphase Pharmaceuticals has a beta of 2.51, suggesting that its stock price is 151% more volatile than the S&P 500. Comparatively, Abbott Laboratories has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.

Summary

Abbott Laboratories beats Tetraphase Pharmaceuticals on 12 of the 17 factors compared between the two stocks.

Tetraphase Pharmaceuticals Company Profile

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.

Abbott Laboratories Company Profile

Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a range of healthcare products. The Company operates through four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. Its Established Pharmaceutical Products include a range of branded generic pharmaceuticals manufactured around the world and marketed and sold outside the United States. Its Diagnostic Products include a range of diagnostic systems and tests. Its Nutritional Products include a range of pediatric and adult nutritional products. Its Company’s Vascular Products include a range of coronary, endovascular, vessel closure and structural heart devices for the treatment of vascular disease. The Company, through St. Jude Medical, Inc., also offers products, such as rhythm management products, electrophysiology products, heart failure related products, vascular products, structural heart products and neuromodulation products.

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