Critical Contrast: Vertex Pharmaceuticals (VRTX) versus Achillion Pharmaceuticals (ACHN)

Vertex Pharmaceuticals (NASDAQ: VRTX) and Achillion Pharmaceuticals (NASDAQ:ACHN) are both healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations for Vertex Pharmaceuticals and Achillion Pharmaceuticals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vertex Pharmaceuticals 0 1 25 0 2.96
Achillion Pharmaceuticals 0 3 3 0 2.50

Vertex Pharmaceuticals presently has a consensus price target of $175.75, indicating a potential upside of 12.02%. Achillion Pharmaceuticals has a consensus price target of $5.30, indicating a potential upside of 78.45%. Given Achillion Pharmaceuticals’ higher probable upside, analysts plainly believe Achillion Pharmaceuticals is more favorable than Vertex Pharmaceuticals.

Insider & Institutional Ownership

93.1% of Vertex Pharmaceuticals shares are owned by institutional investors. Comparatively, 76.9% of Achillion Pharmaceuticals shares are owned by institutional investors. 1.8% of Vertex Pharmaceuticals shares are owned by insiders. Comparatively, 7.2% of Achillion Pharmaceuticals shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Vertex Pharmaceuticals 8.53% 9.23% 5.01%
Achillion Pharmaceuticals N/A -17.84% -17.21%

Risk & Volatility

Vertex Pharmaceuticals has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Achillion Pharmaceuticals has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500.

Valuation & Earnings

This table compares Vertex Pharmaceuticals and Achillion Pharmaceuticals’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vertex Pharmaceuticals $1.70 billion 23.31 -$112.05 million $0.78 201.14
Achillion Pharmaceuticals $15.00 million 27.30 -$61.70 million ($0.49) -6.06

Achillion Pharmaceuticals has lower revenue, but higher earnings than Vertex Pharmaceuticals. Achillion 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.

Summary

Vertex Pharmaceuticals beats Achillion Pharmaceuticals on 10 of the 14 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.

Achillion Pharmaceuticals Company Profile

Achillion Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is engaged in the discovery and development of small molecule drug therapies for infectious diseases and immune system disorders. The Company is focused on its complement inhibitor platform, directed at advancing small molecule compounds that have the potential to be used in the treatment of immune-related diseases associated with the alternative pathway of the complement system. The complement system is part of the human innate immune system. Its clinical compound from its complement inhibitor platform is ACH-4471. ACH-4471 is a potent and specific inhibitor of factor D, which demonstrated complete inhibition of the complement alternative pathway in human healthy volunteers in a Phase I clinical trial. The Company has discovered and advanced multiple compounds into clinical development, including sovaprevir, odalasvir, and ACH-3422 in its hepatitis C virus (HCV) program.

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