NovoCure Limited (NASDAQ: NVCR) and Insmed (NASDAQ:INSM) are both small-cap medical companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for NovoCure Limited and Insmed, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NovoCure Limited 0 1 6 0 2.86
Insmed 0 1 6 0 2.86

NovoCure Limited presently has a consensus target price of $20.14, suggesting a potential upside of 11.90%. Insmed has a consensus target price of $36.71, suggesting a potential upside of 31.08%. Given Insmed’s higher probable upside, analysts clearly believe Insmed is more favorable than NovoCure Limited.

Insider and Institutional Ownership

36.8% of NovoCure Limited shares are owned by institutional investors. Comparatively, 73.1% of Insmed shares are owned by institutional investors. 16.7% of NovoCure Limited shares are owned by company insiders. Comparatively, 5.1% of Insmed shares are owned by company 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.

Profitability

This table compares NovoCure Limited and Insmed’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NovoCure Limited -75.91% -69.48% -34.71%
Insmed N/A -130.41% -85.48%

Volatility & Risk

NovoCure Limited has a beta of 4.35, indicating that its share price is 335% more volatile than the S&P 500. Comparatively, Insmed has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Valuation & Earnings

This table compares NovoCure Limited and Insmed’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NovoCure Limited $125.17 million 12.80 -$69.14 million ($1.10) -16.36
Insmed N/A N/A -$180.87 million ($3.03) -9.24

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

Summary

NovoCure Limited beats Insmed on 7 of the 10 factors compared between the two stocks.

NovoCure Limited Company Profile

NovoCure Limited is a commercial-stage oncology company. The Company is engaged in developing a cancer treatment centered on a therapy called TTFields, the use of electric fields tuned to specific frequencies to disrupt solid tumor cancer cell division. Its TTFields delivery system is used for the treatment of glioblastoma (GBM) and to advance programs testing of TTFields in multiple solid tumor indications through its clinical pipeline. In addition to its clinical and commercial progress in GBM, it is planning or conducting clinical trials evaluating the use of TTFields in brain metastases, non-small-cell lung cancer (NSCLC), pancreatic cancer, ovarian cancer and mesothelioma. TTFields are delivered through a portable, medical device. The complete delivery system, which is designed to allow patients to go about their daily activities while receiving continuous cancer treatment, includes a portable electric field generator, transducer arrays, rechargeable batteries and accessories.

Insmed Company Profile

Insmed Incorporated is a biopharmaceutical company. The Company operates through development and commercialization of therapies for patients with rare diseases segment. Its lead product candidate is ARIKAYCE, or liposomal amikacin for inhalation (LAI), which is in late-stage development for adult patients with treatment refractory nontuberculous mycobacteria (NTM) lung disease caused by Mycobacterium avium complex (MAC). Its earlier-stage pipeline includes preclinical compounds that the Company is evaluating in multiple rare diseases of unmet medical need, including methicillin-resistant staph aureus and NTM. Its earlier clinical-stage pipeline includes INS1007 and INS1009. INS1007 is an oral, reversible inhibitor of dipeptidyl peptidase 1. INS1009 is an inhaled nanoparticle formulation of a treprostinil prodrug that may offer a differentiated product profile for rare pulmonary disorders, including pulmonary arterial hypertension. It has completed a Phase I study of INS1009.

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