Reviewing Conatus Pharmaceuticals (CNAT) & Vertex Pharmaceuticals (VRTX)

Vertex Pharmaceuticals (NASDAQ: VRTX) and Conatus Pharmaceuticals (NASDAQ:CNAT) are both medical companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Profitability

This table compares Vertex Pharmaceuticals and Conatus Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vertex Pharmaceuticals 12.05% 4.64% 2.41%
Conatus Pharmaceuticals N/A -96.53% -33.58%

Institutional & Insider Ownership

94.9% of Vertex Pharmaceuticals shares are held by institutional investors. Comparatively, 23.0% of Conatus Pharmaceuticals shares are held by institutional investors. 1.8% of Vertex Pharmaceuticals shares are held by company insiders. Comparatively, 13.9% of Conatus Pharmaceuticals shares are held by company 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.

Valuation and Earnings

This table compares Vertex Pharmaceuticals and Conatus Pharmaceuticals’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vertex Pharmaceuticals $2.13 billion 17.53 $408.78 million $1.02 145.23
Conatus Pharmaceuticals $17.81 million 8.44 -$25.06 million ($0.99) -5.06

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

Volatility and Risk

Vertex Pharmaceuticals has a beta of 1.77, suggesting that its stock price is 77% more volatile than the S&P 500. Comparatively, Conatus Pharmaceuticals has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Vertex Pharmaceuticals and Conatus Pharmaceuticals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vertex Pharmaceuticals 0 3 21 0 2.88
Conatus Pharmaceuticals 0 0 7 0 3.00

Vertex Pharmaceuticals currently has a consensus price target of $162.41, suggesting a potential upside of 9.64%. Conatus Pharmaceuticals has a consensus price target of $14.67, suggesting a potential upside of 192.75%. Given Conatus Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts plainly believe Conatus Pharmaceuticals is more favorable than Vertex Pharmaceuticals.

Summary

Vertex Pharmaceuticals beats Conatus Pharmaceuticals on 10 of the 13 factors compared between the two stocks.

Vertex Pharmaceuticals Company Profile

Vertex Pharmaceuticals Incorporated is engaged in discovering, developing, manufacturing and commercializing medicines for serious diseases. The Company is focused on developing and commercializing therapies for the treatment of cystic fibrosis (CF) and advancing its research and development programs in other indications. The Company’s marketed medicines are ORKAMBI and KALYDECO. ORKAMBI (lumacaftor in combination with ivacaftor) is approved as a treatment for patients having two copies (homozygous) of the Delta-F508 (F508del) mutation in their cystic fibrosis transmembrane conductance regulator (CFTR) gene. KALYDECO (ivacaftor) is approved for the treatment of CF patients having the G551D mutation or other specified mutations in their CFTR gene. The Company’s development programs in the field of CF include Tezacaftor (VX-661), VX-152, VX-440, VX-659, VX-445 and VX-371. VX-152, VX-440, VX-659 and VX-445 are CFTR corrector compounds.

Conatus Pharmaceuticals Company Profile

Conatus Pharmaceuticals Inc. is a biotechnology company. The Company focuses on the development and commercialization of medicines to treat liver disease. The Company operates through commercialization and development of pharmaceutical products segment. The Company is engaged in developing emricasan, which is an orally active pan-caspase protease inhibitor for the treatment of patients with chronic liver disease. Emricasan has the potential to interrupt the progression of liver disease and provide treatment options in multiple areas of liver disease. Emricasan is designed to slow or halt the progression of chronic liver disease caused by fibrosis and cirrhosis. Emricasan works by inhibiting caspases, which are a family of related enzymes that plays as modulators of critical cellular functions, including functions that result in apoptosis and inflammation.

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