Financial Comparison: Natera (NTRA) and Foundation Medicine (FMI)

Natera (NASDAQ: NTRA) and Foundation Medicine (NASDAQ:FMI) are both medical companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitability, valuation and institutional ownership.

Risk and Volatility

Natera has a beta of 2, suggesting that its stock price is 100% more volatile than the S&P 500. Comparatively, Foundation Medicine has a beta of -0.08, suggesting that its stock price is 108% less volatile than the S&P 500.

Institutional & Insider Ownership

69.4% of Natera shares are owned by institutional investors. Comparatively, 33.4% of Foundation Medicine shares are owned by institutional investors. 13.2% of Natera shares are owned by insiders. Comparatively, 3.0% of Foundation Medicine shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Natera and Foundation Medicine’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Natera -58.84% -752.93% -66.23%
Foundation Medicine -84.96% -299.63% -94.81%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Natera and Foundation Medicine, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Natera 0 0 6 0 3.00
Foundation Medicine 0 3 1 0 2.25

Natera presently has a consensus target price of $19.33, suggesting a potential downside of 2.99%. Foundation Medicine has a consensus target price of $81.00, suggesting a potential downside of 40.72%. Given Natera’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Natera is more favorable than Foundation Medicine.

Valuation and Earnings

This table compares Natera and Foundation Medicine’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Natera $210.94 million 5.15 -$136.31 million ($2.40) -8.30
Foundation Medicine $152.90 million 33.10 -$161.46 million ($4.50) -30.37

Natera has higher revenue and earnings than Foundation Medicine. Foundation Medicine is trading at a lower price-to-earnings ratio than Natera, indicating that it is currently the more affordable of the two stocks.

Summary

Natera beats Foundation Medicine on 12 of the 14 factors compared between the two stocks.

Natera Company Profile

Natera, Inc., a diagnostics company, provides preconception and prenatal genetic testing services. It primarily offers Panorama, a non-invasive prenatal test that screens for chromosomal abnormalities of a fetus typically with a blood draw from the mother; Vistara, a single-gene mutations screening test to identify single-gene disorder; Horizon carrier screening to determine carrier status for various genetic diseases that could be passed on to the carrier's children; and Spectrum pre-implantation genetic screening and Spectrum pre-implantation genetic diagnosis to analyze chromosomal anomalies or inherited genetic conditions during an in vitro fertilization cycle. The company also provides Anora Products of Conception test to analyze fetal chromosomes to understand the cause of miscarriage; and non-invasive paternity testing products to determine paternity by analyzing the fragments of fetal deoxyribonucleic acid in a pregnant mother's blood and a blood sample from the alleged father. In addition, it offers Constellation, a cloud-based software product that allows laboratory customers to gain access through the cloud to the company's algorithms and bioinformatics in order to validate and launch tests. The company offers products through its direct sales force, as well as through a network of approximately 70 laboratory and distribution partners in the United States and internationally. The company was formerly known as Gene Security Network, Inc. and changed its name to Natera, Inc. in 2012. Natera, Inc. was founded in 2003 and is headquartered in San Carlos, California.

Foundation Medicine Company Profile

Foundation Medicine, Inc. provides various molecular information products in the United States. The company's molecular information platform includes proprietary methods and algorithms to analyze specimens across various types of cancer, as well as for incorporating that information into clinical care; and offers genomic insights about each patient's individual cancer, enabling physicians to optimize treatments in clinical practice and biopharmaceutical companies to develop targeted therapies and immunotherapies. It provides clinical products, such as FoundationOne for solid tumors; FoundationOne Heme for blood-based cancers, or hematologic malignancies, including leukemia, lymphoma, and sarcomas; Foundation Assay for Circulating Tumor; FoundationFocus CDxBRCA, a diagnostic assay to aid in identifying women with ovarian cancer; and FoundationOne CDx, a diagnostic assay for solid tumors. The company also offers FoundationCORE, a knowledgebase to publish scientific and medical advances, and foster relationships throughout the oncology community. In addition, it has strategic collaboration agreements with F. Hoffmann-La Roche Ltd.; and Genentech, Inc. Foundation Medicine, Inc. has a collaboration with The European Organisation for Research and Treatment of Cancer to advance precision medicine using comprehensive genomic profiling to facilitate clinical trial enrollment. It also has a three-party collaboration agreement with F. Hoffmann-La Roche Ltd and DIAN Diagnostics Group, Co., Ltd. to integrate the company's comprehensive genomic profiling assays into clinical patient care in mainland China. The company was founded in 2009 and is headquartered in Cambridge, Massachusetts. Foundation Medicine, Inc. is a subsidiary of Roche Holdings, Inc.

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