Critical Review: Enanta Pharmaceuticals (NASDAQ:ENTA) and Amarin (NASDAQ:AMRN)

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

Insider and Institutional Ownership

22.3% of Amarin shares are owned by institutional investors. Comparatively, 95.0% of Enanta Pharmaceuticals shares are owned by institutional investors. 4.2% of Amarin shares are owned by insiders. Comparatively, 11.5% of Enanta Pharmaceuticals shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Amarin and Enanta Pharmaceuticals”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amarin	$213.65 million	1.21	-$38.80 million	($0.96)	-12.76
Enanta Pharmaceuticals	$65.32 million	4.75	-$81.89 million	($2.41)	-4.42

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

Analyst Ratings

This is a summary of recent recommendations for Amarin and Enanta Pharmaceuticals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amarin	2	0	0	1	2.00
Enanta Pharmaceuticals	1	0	3	0	2.50

Amarin presently has a consensus target price of $13.00, suggesting a potential upside of 6.12%. Enanta Pharmaceuticals has a consensus target price of $19.00, suggesting a potential upside of 78.40%. Given Enanta Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts plainly believe Enanta Pharmaceuticals is more favorable than Amarin.

Profitability

This table compares Amarin and Enanta Pharmaceuticals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Amarin	-10.87%	-0.52%	-0.36%
Enanta Pharmaceuticals	-96.89%	-61.84%	-20.70%

Volatility and Risk

Amarin has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Enanta Pharmaceuticals has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Summary

Amarin beats Enanta Pharmaceuticals on 8 of the 15 factors compared between the two stocks.

About Amarin

Amarin Corporation plc, a pharmaceutical company, engages in the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States, European countries, Canada, Lebanon, and the United Arab Emirates. The company offers VASCEPA, a prescription-only omega-3 fatty acid product, used as an adjunct to diet for reducing triglyceride levels in adult patients with severe hypertriglyceridemia. It sells its products principally to wholesalers and specialty pharmacy providers. The company has a collaboration with Mochida Pharmaceutical Co., Ltd. to develop and commercialize drug products and indications based on the active pharmaceutical ingredient in Vascepa. The company was formerly known as Ethical Holdings plc and changed its name to Amarin Corporation plc in 1999. Amarin Corporation plc was incorporated in 1989 and is headquartered in Dublin, Ireland.

About Enanta Pharmaceuticals

Enanta Pharmaceuticals, Inc., a biotechnology company, discovers and develops small molecule drugs for the treatment of viral infections and liver diseases. Its product pipeline comprises EDP-514, which is in phase 1b clinical development for the treatment of chronic infection with hepatitis B virus or HBV; EDP-938 and EDP-323, which is in phase II clinical development for the treatment of respiratory syncytial virus; EDP-235, which is in phase II clinical development for the treatment of human coronaviruses; and Glecaprevir, which is in the market for the treatment of chronic infection with hepatitis C virus or HCV. The company has a collaborative development and license agreement with Abbott Laboratories to develop, manufacture, and commercialize HCV NS3 and NS3/4A protease inhibitor compounds, including paritaprevir and glecaprevir. Enanta Pharmaceuticals, Inc. was incorporated in 1995 and is headquartered in Watertown, Massachusetts.