Impax Laboratories (IPXL) and Lannett Co (LCI) Critical Review

Lannett Co (NYSE: LCI) and Impax Laboratories (NASDAQ:IPXL) are both small-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Valuation and Earnings

This table compares Lannett Co and Impax Laboratories’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lannett Co $637.34 million 1.35 $245.00 million ($0.03) -771.41
Impax Laboratories $812.82 million 1.71 $144.42 million ($8.07) -2.39

Lannett Co has higher revenue, but lower earnings than Impax Laboratories. Lannett Co is trading at a lower price-to-earnings ratio than Impax Laboratories, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lannett Co and Impax Laboratories’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lannett Co -0.09% 19.80% 6.42%
Impax Laboratories -71.08% 9.05% 3.20%

Volatility and Risk

Lannett Co has a beta of 2.76, indicating that its share price is 176% more volatile than the S&P 500. Comparatively, Impax Laboratories has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Lannett Co and Impax Laboratories, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lannett Co 0 3 2 0 2.40
Impax Laboratories 1 9 5 0 2.27

Lannett Co currently has a consensus target price of $21.00, indicating a potential downside of 9.29%. Impax Laboratories has a consensus target price of $19.67, indicating a potential upside of 1.90%. Given Impax Laboratories’ higher possible upside, analysts plainly believe Impax Laboratories is more favorable than Lannett Co.

Institutional and Insider Ownership

87.9% of Lannett Co shares are owned by institutional investors. Comparatively, 86.3% of Impax Laboratories shares are owned by institutional investors. 15.0% of Lannett Co shares are owned by insiders. Comparatively, 3.2% of Impax Laboratories shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Lannett Co beats Impax Laboratories on 9 of the 14 factors compared between the two stocks.

Lannett Co Company Profile

Lannett Company, Inc. develops, manufactures, markets and distributes generic versions of brand pharmaceutical products. The Company manufactures and/or distributes prescription products with the exception of a small portfolio of over-the-counter products manufactured by its subsidiary, Silarx Pharmaceuticals, Inc. As of June 30, 2016, the Company’s products included Acetazolamide Tablets; Butalbital, Acetaminophen and Caffeine Tablets; Butalbital, Aspirin and Caffeine Capsules; C-Topical Solution; Digoxin Tablets; Glycolax Rx; Isosorbide Mononitrate CR; Levothyroxine Sodium Tablets; Methylphenidate HCL CD; Methylphenidate ER; Nifedipine CR; Omeprazole DR; Oxbutynin ER; Pantoprazole DR; Pilocarpine HCl Tablets; Triamterene w/Hydrochlorothiazide Capsules, and Ursodiol Capsules. The Company has additional products under development, which are orally administered solid oral-dosage products (tablet/capsule) or oral solutions, nasal, topicals or parentarels, as well as other dosage forms.

Impax Laboratories Company Profile

Impax Laboratories, Inc. is a specialty pharmaceutical company. The Company is engaged in the development, manufacture and marketing of bioequivalent pharmaceutical products (generics), in addition to the development and marketing of branded products. Its segments include Impax Generics and Impax Specialty Pharma. The Impax Generics segment is focused on the development, manufacture, sale and distribution of its generic products, which are the pharmaceutical and therapeutic equivalents of brand-name drug products and are marketed under their established drug names. The Impax Specialty Pharma segment is engaged in the promotion, sale and distribution of several branded products, including its branded pharmaceutical product, Rytary, an extended release oral capsule formulation of carbidopa-levodopa for the treatment of Parkinson’s disease, post-encephalitic Parkinsonism and Parkinsonism, and Zomig (zolmitriptan) products, indicated for the treatment of migraine headaches.

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