Catalyst Pharmaceuticals (NASDAQ: CPRX) and TESARO (NASDAQ:TSRO) are both medical companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Insider & Institutional Ownership

34.9% of Catalyst Pharmaceuticals shares are held by institutional investors. 9.6% of Catalyst Pharmaceuticals shares are held by company insiders. Comparatively, 34.6% of TESARO shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Catalyst Pharmaceuticals and TESARO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Catalyst Pharmaceuticals N/A -48.86% -45.62%
TESARO -251.22% -93.39% -61.53%

Volatility and Risk

Catalyst Pharmaceuticals has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500. Comparatively, TESARO has a beta of 1.51, indicating that its stock price is 51% more volatile than the S&P 500.

Valuation & Earnings

This table compares Catalyst Pharmaceuticals and TESARO’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Catalyst Pharmaceuticals N/A N/A -$18.07 million ($0.21) -16.52
TESARO $44.82 million 82.44 -$387.47 million ($8.43) -8.06

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Catalyst Pharmaceuticals and TESARO, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Catalyst Pharmaceuticals 0 0 4 0 3.00
TESARO 0 9 14 0 2.61

Catalyst Pharmaceuticals currently has a consensus price target of $6.25, suggesting a potential upside of 80.12%. TESARO has a consensus price target of $148.74, suggesting a potential upside of 118.89%. Given TESARO’s higher possible upside, analysts clearly believe TESARO is more favorable than Catalyst Pharmaceuticals.

Summary

Catalyst Pharmaceuticals beats TESARO on 8 of the 13 factors compared between the two stocks.

Catalyst Pharmaceuticals Company Profile

Catalyst Pharmaceuticals, Inc., formerly Catalyst Pharmaceutical Partners, Inc., is a development-stage biopharmaceutical company. The Company is focused on developing and commercializing therapies for people with rare debilitating diseases. The Company has three drugs in development: Firdapse, CPP-109 and CPP-115. The Company’s Firdapse is indicated for the treatments of lambert-eaton myasthenic syndrome (LEMS) and congenital myasthenic syndromes (CMS). Firdapse consists of the phosphate salt of amifampridine. The Company has completed the Phase III trial of Firdapse. The Company’s CPP-109 (vigabatrin) is a gamma-aminobutyric acid (GABA) aminotransferase inhibitor. CPP-109 is indicated for the treatment of Tourette’s Disorder. The Company’s CPP-115 is a GABA aminotransferase inhibitor. CPP-115 is indicated for the treatment of selected neurological indications, such as complex partial seizures and Tourette’s Disorder, and epilepsy.

TESARO Company Profile

TESARO, Inc. is an oncology-focused biopharmaceutical company. The Company operates through the business of developing and commercializing of oncology-focused therapeutics segment. It is developing oncology-related product candidates, including rolapitant, niraparib and the product candidates under its immuno-oncology platform. Rolapitant is a potent and long-acting neurokinin-1 receptor antagonist for the prevention of chemotherapy induced nausea and vomiting. Niraparib is an orally active and potent poly (adenosine diphosphate (ADP)-ribose) polymerase inhibitor. It has various ongoing clinical trials evaluating niraparib for the treatment of ovarian or breast cancers. It has initiated a Phase I, dose escalation study for its first immuno-oncology antibody, TSR-042, which targets Programmed cell death protein 1. It has commenced pre-clinical research for its antibody candidate targeting Lymphocyte-activation gene-3 andTSR-033. It has commenced a Phase I clinical trial of TSR-042.

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