Head-To-Head Review: Terns Pharmaceuticals (NASDAQ:TERN) versus Illumina (NASDAQ:ILMN)

Illumina (NASDAQ:ILMN) and Terns Pharmaceuticals (NASDAQ:TERN) are both medical companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Valuation and Earnings

This table compares Illumina and Terns Pharmaceuticals”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Illumina	$4.37 billion	4.95	-$1.22 billion	$4.46	31.76
Terns Pharmaceuticals	N/A	N/A	-$88.85 million	($1.03)	-35.53

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

Profitability

This table compares Illumina and Terns Pharmaceuticals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Illumina	16.40%	29.21%	11.07%
Terns Pharmaceuticals	N/A	-29.95%	-28.50%

Insider & Institutional Ownership

89.4% of Illumina shares are owned by institutional investors. Comparatively, 98.3% of Terns Pharmaceuticals shares are owned by institutional investors. 2.6% of Illumina shares are owned by insiders. Comparatively, 1.5% of Terns Pharmaceuticals 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.

Volatility and Risk

Illumina has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Terns Pharmaceuticals has a beta of -0.28, meaning that its stock price is 128% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Illumina and Terns Pharmaceuticals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Illumina	2	14	5	0	2.14
Terns Pharmaceuticals	1	0	11	1	2.92

Illumina currently has a consensus target price of $122.56, suggesting a potential downside of 13.48%. Terns Pharmaceuticals has a consensus target price of $55.56, suggesting a potential upside of 51.79%. Given Terns Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts clearly believe Terns Pharmaceuticals is more favorable than Illumina.

Summary

Illumina beats Terns Pharmaceuticals on 8 of the 14 factors compared between the two stocks.

About Illumina

Illumina, Inc. offers sequencing- and array-based solutions for genetic and genomic analysis in the United States, Singapore, the United Kingdom, and internationally. It operates through Core Illumina and GRAIL segments. The company offers sequencing and array-based instruments and consumables, which include reagents, flow cells, and library preparation; whole-genome sequencing kits, which sequence entire genomes of various size and complexity; and targeted resequencing kits, which sequence exomes, specific genes, and RNA or other genomic regions of interest. It also provides whole-genome sequencing, genotyping, noninvasive prenatal testing, and product support services; and Galleri, a multi-cancer early detection test. In addition, the company is developing solutions to help accelerate cancer diagnoses, blood-based detection for minimal residual disease, and other post-diagnostic applications. The company serves genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. It markets and distributes its products directly to customers, as well as through life-science distributors. Illumina, Inc. was incorporated in 1998 and is based in San Diego, California.

About Terns Pharmaceuticals

Terns Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, develops small-molecule product candidates for the treatment of oncology, metabolic dysfunction-associated steatohepatitis (MASH), and obesity. The company develops TERN-701, an allosteric BCR-ABL tyrosine kinase inhibitor (TKI) that is in phase 1 clinical trial for chronic myeloid leukemia (CML), a form of cancer that starts in bone marrow. It also develops TERN-501, a thyroid hormone receptor beta agonist with enhanced liver distribution and metabolic stability that is in Phase IIa clinical trial for the treatment of MASH; and TERN-601, a small-molecule Glucagon-Like Peptide-1 receptor agonist program that is intended to orally be administered for obesity. The company was incorporated in 2016 and is headquartered in Foster City, California.