DURECT (NASDAQ: DRRX) and KemPharm (NASDAQ:KMPH) are both small-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.
Volatility and Risk
DURECT has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, KemPharm has a beta of -1.09, suggesting that its stock price is 209% less volatile than the S&P 500.
This table compares DURECT and KemPharm’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and target prices for DURECT and KemPharm, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DURECT currently has a consensus target price of $2.67, indicating a potential upside of 115.05%. KemPharm has a consensus target price of $9.25, indicating a potential upside of 60.87%. Given DURECT’s higher possible upside, research analysts clearly believe DURECT is more favorable than KemPharm.
Valuation & Earnings
This table compares DURECT and KemPharm’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DURECT||$14.02 million||13.14||-$34.50 million||($0.15)||-8.27|
KemPharm has lower revenue, but higher earnings than DURECT. DURECT is trading at a lower price-to-earnings ratio than KemPharm, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
44.7% of DURECT shares are held by institutional investors. Comparatively, 36.0% of KemPharm shares are held by institutional investors. 10.3% of DURECT shares are held by insiders. Comparatively, 22.8% of KemPharm shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
KemPharm beats DURECT on 7 of the 13 factors compared between the two stocks.
DURECT Company Profile
Durect Corporation is a biopharmaceutical company with research and development programs. The Company’s products candidates include DUR-928, oral for metabolic/lipid disorders, and DUR-928, injectable for acute organ injuries. Its other product candidates include POSIMIR (controlled release injection of bupivacaine), REMOXY (oral controlled release oxycodone), ORADUR-ADHD, ELADUR (controlled release injection of bupivicane), Relday (risperidone), ORADUR-based opioid (hydromorphone) and SABER-based ophthalmic. The Company’s ALZET product line consists of miniature, implantable osmotic pumps and accessories used for experimental research in mice, rats and other laboratory animals. The Company also manufactures and sells osmotic pumps used in laboratory research and design; and develops and manufactures a range of standard and custom biodegradable polymers and excipients for pharmaceutical and medical device clients for use as raw materials in their products.
KemPharm Company Profile
KemPharm, Inc. is a clinical-stage specialty pharmaceutical company. The Company is engaged in the discovery and development of prodrugs. The Company uses its Ligand Activated Therapy (LAT) platform technology to create prodrugs. The Company’s product candidate, KP201/APAP, consists of KP201, its prodrug of hydrocodone, which is combined with acetaminophen (APAP). The Company is developing KP201/APAP as an immediate release (IR), a product candidate for the short-term, or no longer than 14 days for the management of acute pain. The Company has designed KP201/APAP with abuse-deterrent properties to address the epidemic of opioid abuse in the United States. The Company also focuses on developing the pipeline of additional prodrug product candidates that targets pain and attention deficit hyperactivity disorder (ADHD). The Company’s products include KP201/IR (APAP-free), KP511/ER, KP415, KP606/IR and KP746.
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