Head to Head Analysis: Harrow (NASDAQ:HROW) and Royalty Pharma (NASDAQ:RPRX)

Harrow (NASDAQ:HROW) and Royalty Pharma (NASDAQ:RPRX) are both healthcare companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, institutional ownership, analyst recommendations and risk.

Earnings & Valuation

This table compares Harrow and Royalty Pharma”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harrow	$272.30 million	3.99	-$5.14 million	($1.00)	-28.95
Royalty Pharma	$2.38 billion	15.66	$770.95 million	$1.45	44.66

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

Volatility and Risk

Harrow has a beta of 0.19, suggesting that its share price is 81% less volatile than the S&P 500. Comparatively, Royalty Pharma has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Harrow and Royalty Pharma, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harrow	1	2	7	0	2.60
Royalty Pharma	0	0	8	0	3.00

Harrow currently has a consensus target price of $66.17, indicating a potential upside of 128.55%. Royalty Pharma has a consensus target price of $61.57, indicating a potential downside of 4.92%. Given Harrow’s higher possible upside, equities research analysts clearly believe Harrow is more favorable than Royalty Pharma.

Profitability

This table compares Harrow and Royalty Pharma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harrow	-13.51%	-38.00%	-3.37%
Royalty Pharma	32.14%	30.01%	14.91%

Insider and Institutional Ownership

72.8% of Harrow shares are held by institutional investors. Comparatively, 54.3% of Royalty Pharma shares are held by institutional investors. 12.8% of Harrow shares are held by company insiders. Comparatively, 18.8% of Royalty Pharma shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Royalty Pharma beats Harrow on 11 of the 13 factors compared between the two stocks.

About Harrow

Harrow, Inc. operates as an ophthalmic-focused healthcare company. The company owns ImprimisRx, an ophthalmology outsourcing and pharmaceutical compounding business. The company was formerly known as Imprimis Pharmaceuticals, Inc. and changed its name to Harrow Health, Inc. in December 2018. Harrow Health, Inc. was incorporated in 2006 and is headquartered in Nashville, Tennessee.

About Royalty Pharma

Royalty Pharma plc operates as a buyer of biopharmaceutical royalties and a funder of innovations in the biopharmaceutical industry in the United States. It is also involved in the identification, evaluation, and acquisition of royalties on various biopharmaceutical therapies. In addition, the company collaborates with innovators from academic institutions, research hospitals and not-for-profits, small and mid-cap biotechnology companies, and pharmaceutical companies. Its portfolio consists of royalties on approximately 35 commercial products and 14 development-stage product candidates that address various therapeutic areas, such as rare disease, cancer, neuroscience, immunology, respiratory, infectious disease, hematology, and diabetes. The company was founded in 1996 and is based in New York, New York.