Heron Therapeutics (NASDAQ:HRTX) and Amarin (AMRN) Critical Analysis

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Amarin (NASDAQ: HRTX) and Heron Therapeutics (NASDAQ:HRTX) are both medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Profitability

This table compares Amarin and Heron Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Amarin -46.31% N/A -48.98%
Heron Therapeutics -411.41% -112.35% -74.65%

Institutional & Insider Ownership

38.3% of Amarin shares are held by institutional investors. 4.1% of Amarin shares are held by insiders. Comparatively, 16.2% of Heron Therapeutics shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Amarin and Heron Therapeutics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Amarin $181.10 million 4.68 -$67.86 million ($0.25) -11.60
Heron Therapeutics $30.77 million 87.53 -$197.48 million $3.65 9.49

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

Volatility and Risk

Amarin has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Heron Therapeutics has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Amarin and Heron Therapeutics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Amarin 0 0 3 0 3.00
Heron Therapeutics 0 0 11 0 3.00

Amarin presently has a consensus price target of $10.00, suggesting a potential upside of 244.83%. Heron Therapeutics has a consensus price target of $51.18, suggesting a potential upside of 47.71%. Given Amarin’s higher possible upside, research analysts plainly believe Amarin is more favorable than Heron Therapeutics.

Summary

Amarin beats Heron Therapeutics on 7 of the 12 factors compared between the two stocks.

Amarin Company Profile

Amarin Corporation plc, a biopharmaceutical company, focuses on the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States. The company's lead product is Vascepa, a prescription-only omega-3 fatty acid capsule, used as an adjunct to diet for reducing triglyceride levels in adult patients with severe hypertriglyceridemia. It is also involved in developing Vascepa for the treatment of patients with high triglyceride levels who are also on statin therapy for elevated low-density lipoprotein cholesterol levels. Amarin Corporation plc sells its products principally to wholesalers and specialty pharmacy providers through direct sales force. It has collaboration with Mochida Pharmaceutical Co., Ltd. for the development of EPA-Based drug products and indications. The company was formerly known as Ethical Holdings plc and changed its name to Amarin Corporation plc in 1999. Amarin Corporation plc was founded in 1989 and is based in Dublin, Ireland.

Heron Therapeutics Company Profile

Heron Therapeutics, Inc., a biotechnology company, engages in developing medicines to address unmet medical needs. The company's product candidates utilize its proprietary Biochronomer drug delivery technology, which delivers therapeutic levels of a range of short-acting pharmacological agents over a period from days to weeks with a single administration. It offers SUSTOL (granisetron) extended-release injection for the prevention of acute and delayed chemotherapy-induced nausea and vomiting (CINV) associated with moderately emetogenic chemotherapy, or anthracycline and cyclophosphamide combination chemotherapy regimens. The company is also developing CINVANTI, a neurokinin-1 receptor antagonist aprepitant for the prevention of CINV; and HTX-011, which is in Phase III clinical development for the prevention of post-operative pain. The company was formerly known as A.P. Pharma, Inc. and changed its name to Heron Therapeutics, Inc. in January 2014. Heron Therapeutics, Inc. was founded in 1983 and is headquartered in San Diego, California.

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