Analyzing Achaogen (AKAO) and Vanda Pharmaceuticals (VNDA)

Achaogen (NASDAQ: AKAO) and Vanda Pharmaceuticals (NASDAQ:VNDA) are both small-cap healthcare companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations for Achaogen and Vanda Pharmaceuticals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Achaogen 0 1 8 0 2.89
Vanda Pharmaceuticals 0 0 5 0 3.00

Achaogen presently has a consensus price target of $25.63, indicating a potential upside of 124.78%. Vanda Pharmaceuticals has a consensus price target of $22.20, indicating a potential upside of 48.49%. Given Achaogen’s higher probable upside, research analysts clearly believe Achaogen is more favorable than Vanda Pharmaceuticals.

Volatility and Risk

Achaogen has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500. Comparatively, Vanda Pharmaceuticals has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500.

Profitability

This table compares Achaogen and Vanda Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Achaogen -593.61% -80.44% -51.17%
Vanda Pharmaceuticals -9.01% -10.99% -6.89%

Institutional and Insider Ownership

85.7% of Achaogen shares are held by institutional investors. Comparatively, 88.4% of Vanda Pharmaceuticals shares are held by institutional investors. 8.4% of Achaogen shares are held by company insiders. Comparatively, 7.6% of Vanda Pharmaceuticals shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Achaogen $41.77 million 11.57 -$71.22 million ($3.36) -3.39
Vanda Pharmaceuticals $146.02 million 4.60 -$18.01 million ($0.31) -48.22

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

Summary

Vanda Pharmaceuticals beats Achaogen on 8 of the 13 factors compared between the two stocks.

Achaogen Company Profile

Achaogen, Inc. is a late-stage biopharmaceutical company. The Company is engaged in the discovery, development and commercialization of antibacterial treatments against multi-drug resistant (MDR) gram-negative infections. The Company is involved in researching and developing plazomicin, its lead product candidate, for the treatment of serious bacterial infections, including complicated urinary tract infection (cUTI), blood stream infections and other infections due to MDR Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae (CRE). Plazomicin is an intravenous aminoglycoside antibiotic. The Company has developed plazomicin by chemically modifying sisomicin, a naturally occurring aminoglycoside, in order to overcome common aminoglycoside resistance mechanisms. The Company has a portfolio of small molecule and antibody programs. The Company’s Early Development programs include C-Scape and LpxC.

Vanda Pharmaceuticals Company Profile

Vanda Pharmaceuticals Inc. is a biopharmaceutical company. The Company is focused on the development and commercialization of therapies to address unmet medical needs. Its product portfolio includes HETLIOZ (tasimelteon), Fanapt (iloperidone), Tradipitant (VLY-686), Trichostatin A and AQW051. It offers HETLIOZ for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24). HETLIOZ is in clinical development for the treatment of Pediatric Non-24, Jet Lag Disorder and Smith-Magenis Syndrome. It offers Fanapt for the treatment of schizophrenia. Fanapt has potential utility in various other disorders. Tradipitant is a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is in clinical development for the treatment of chronic pruritus in atopic dermatitis. Trichostatin A is a small molecule histone deacetylase (HDAC) inhibitor. AQW051 is a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist. AQW051 is indicated for the treatment of central nervous system disorders.

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