Royalty Pharma (NASDAQ:RPRX – Get Free Report) and Amarin (NASDAQ:AMRN – Get Free Report) are both healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, analyst recommendations, institutional ownership and dividends.
Volatility & Risk
Royalty Pharma has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500. Comparatively, Amarin has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500.
Valuation and Earnings
This table compares Royalty Pharma and Amarin”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Royalty Pharma | $2.38 billion | 14.65 | $770.95 million | $1.45 | 41.79 |
| Amarin | $186.23 million | 1.62 | -$38.80 million | ($0.99) | -14.39 |
Royalty Pharma has higher revenue and earnings than Amarin. Amarin is trading at a lower price-to-earnings ratio than Royalty Pharma, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Royalty Pharma and Amarin’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Royalty Pharma | 32.14% | 30.01% | 14.91% |
| Amarin | -14.56% | -0.20% | -0.14% |
Analyst Ratings
This is a breakdown of recent recommendations and price targets for Royalty Pharma and Amarin, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Royalty Pharma | 0 | 0 | 8 | 0 | 3.00 |
| Amarin | 2 | 1 | 0 | 0 | 1.33 |
Royalty Pharma presently has a consensus price target of $61.29, suggesting a potential upside of 1.15%. Amarin has a consensus price target of $13.00, suggesting a potential downside of 8.77%. Given Royalty Pharma’s stronger consensus rating and higher probable upside, equities analysts plainly believe Royalty Pharma is more favorable than Amarin.
Institutional and Insider Ownership
54.3% of Royalty Pharma shares are owned by institutional investors. Comparatively, 22.3% of Amarin shares are owned by institutional investors. 18.8% of Royalty Pharma shares are owned by insiders. Comparatively, 4.2% of Amarin shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Summary
Royalty Pharma beats Amarin on 13 of the 14 factors compared between the two stocks.
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.
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.
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