Financial Review: Depomed (DEPO) & The Medicines (MDCO)

The Medicines (NASDAQ: MDCO) and Depomed (NASDAQ:DEPO) are both medical companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, risk, valuation and profitability.

Insider and Institutional Ownership

92.8% of Depomed shares are owned by institutional investors. 7.9% of The Medicines shares are owned by company insiders. Comparatively, 2.6% of Depomed shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for The Medicines and Depomed, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Medicines 0 2 8 0 2.80
Depomed 1 5 3 0 2.22

The Medicines currently has a consensus price target of $53.22, suggesting a potential upside of 49.92%. Depomed has a consensus price target of $13.22, suggesting a potential upside of 101.87%. Given Depomed’s higher probable upside, analysts plainly believe Depomed is more favorable than The Medicines.

Profitability

This table compares The Medicines and Depomed’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Medicines -670.46% -137.20% -45.68%
Depomed -26.02% -45.03% -9.34%

Volatility & Risk

The Medicines has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Depomed has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Valuation & Earnings

This table compares The Medicines and Depomed’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Medicines $105.76 million 24.38 -$300.67 million ($9.94) -3.57
Depomed $425.34 million 0.97 $112.64 million ($1.79) -3.66

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

Summary

Depomed beats The Medicines on 9 of the 13 factors compared between the two stocks.

The Medicines Company Profile

The Medicines Company is a global biopharmaceutical company. The Company is focused on advancing the treatment of acute and intensive care patients through the delivery of medicines to the hospital marketplace around the world. It markets Angiomax (bivalirudin), Ionsys (fentanyl iontophoretic transdermal system), Minocin (minocycline) for injection and Orbactiv (oritavancin). It also has a pipeline of products in development, including Carbavance, inclisiran and MDCO-700. Carbavance is used for the treatment of hospitalized patients with gram-negative bacterial infections. Inclisiran is used for the treatment of hypercholesterolemia. MDCO-700 includes sedative-hypnotic, which is used to induce and maintain sedation for procedural care and general anesthesia for surgical care. In addition to these products and products in development, it has a portfolio of generic drugs.

Depomed Company Profile

Depomed, Inc. is a specialty pharmaceutical company. The Company focuses on pain and other central nervous system (CNS) conditions. Its products include NUCYNTA ER (tapentadol extended release tablets), NUCYNTA IR (NUCYNTA) (tapentadol), Gralise (gabapentin), CAMBIA (diclofenac potassium for oral solution), Zipsor (diclofenac potassium) and Lazanda (fentanyl). Its NUCYNTA ER (tapentadol extended release tablets) is a product for the management of pain severe enough to require daily long term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and its NUCYNTA (tapentadol) is a product for the management of moderate to severe acute pain in adults. Its Gralise (gabapentin) is a once-daily product for the management of postherpetic neuralgia. Its CAMBIA (diclofenac potassium for oral solution) is a product for the acute treatment of migraine attacks.

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