The Medicines (MDCO) and Depomed (NASDAQ:DEPO) Head to Head Review

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Depomed and The Medicines, as reported by MarketBeat.com.

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

Depomed presently has a consensus target price of $13.22, indicating a potential upside of 101.87%. The Medicines has a consensus target price of $53.22, indicating a potential upside of 49.92%. Given Depomed’s higher possible upside, equities research analysts plainly believe Depomed is more favorable than The Medicines.

Risk & Volatility

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

Earnings and Valuation

This table compares Depomed and The Medicines’ revenue, earnings per share and valuation.

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

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.

Profitability

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

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

Institutional & Insider Ownership

92.8% of Depomed shares are owned by institutional investors. 2.6% of Depomed shares are owned by insiders. Comparatively, 7.9% of The Medicines shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

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

About Depomed

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.

About The Medicines

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.

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