Dr. Reddy’s Laboratories (NYSE: RDY) and Innoviva (NASDAQ:INVA) are both medical companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.
Insider & Institutional Ownership
13.1% of Dr. Reddy’s Laboratories shares are owned by institutional investors. Comparatively, 75.0% of Innoviva shares are owned by institutional investors. 2.0% of Dr. Reddy’s Laboratories shares are owned by company insiders. Comparatively, 1.6% of Innoviva shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Dr. Reddy’s Laboratories pays an annual dividend of $0.29 per share and has a dividend yield of 0.9%. Innoviva does not pay a dividend. Dr. Reddy’s Laboratories pays out 31.2% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Dr. Reddy’s Laboratories and Innoviva’s top-line revenue, earnings per share and valuation.
||Earnings Per Share
|Dr. Reddy’s Laboratories
Dr. Reddy’s Laboratories has higher revenue and earnings than Innoviva. Innoviva is trading at a lower price-to-earnings ratio than Dr. Reddy’s Laboratories, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Dr. Reddy’s Laboratories has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500. Comparatively, Innoviva has a beta of 2.34, suggesting that its stock price is 134% more volatile than the S&P 500.
This is a summary of recent ratings and price targets for Dr. Reddy’s Laboratories and Innoviva, as reported by MarketBeat.
||Strong Buy Ratings
|Dr. Reddy’s Laboratories
Dr. Reddy’s Laboratories presently has a consensus price target of $30.51, suggesting a potential downside of 7.99%. Innoviva has a consensus price target of $13.40, suggesting a potential downside of 15.93%. Given Dr. Reddy’s Laboratories’ stronger consensus rating and higher probable upside, research analysts plainly believe Dr. Reddy’s Laboratories is more favorable than Innoviva.
This table compares Dr. Reddy’s Laboratories and Innoviva’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|Dr. Reddy’s Laboratories
Dr. Reddy’s Laboratories beats Innoviva on 9 of the 16 factors compared between the two stocks.
About Dr. Reddy’s Laboratories
Dr. Reddy's Laboratories Limited operates as an integrated pharmaceutical company worldwide. It operates through three segments: Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary Products. The Global Generics segment manufactures and markets prescription and over-the-counter finished pharmaceutical products that are marketed under a brand name or as a generic finished dosage with therapeutic equivalence to branded formulations. This segment also engages in the biologics business. The PSAI segment manufactures and markets active pharmaceutical ingredients and intermediates, which are principal ingredients for finished pharmaceutical products. It also provides contract research services; and manufactures and sells active pharmaceutical ingredients and steroids in accordance with the specific customer requirements. The Proprietary Products segment focuses on the research, development, and manufacture of differentiated formulations for dermatology and neurology therapeutic areas. It also provides a portfolio of in-licensed dermatology products. As of March 31, 2017, this segment had 16 active products development programs pipeline that are in various stages of development. The company's therapeutic categories primarily include gastro-intestinal, cardiovascular, anti-diabetic, pain management, oncology, dermatology, urology, and nephrology. It has collaboration, license, and option agreement with Curis, Inc. to discover, develop, and commercialize small molecule antagonists for immuno-oncology and precision oncology; collaboration agreement with Merck Serono to co-develop a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies; and strategic collaboration with Amgen Inc. for the commercialization of oncology and osteoporosis medicines. Dr. Reddy's Laboratories Limited was founded in 1984 and is headquartered in Hyderabad, India.
Innoviva, Inc., formerly Theravance, Inc., is engaged in the development, commercialization and financial management of bio-pharmaceuticals. It focuses on the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate (FF)/vilanterol (VI)) and ANORO ELLIPTA (umeclidinium bromide/vilanterol (UMEC/VI)). Under the Long-Acting Beta2 Agonist (LABA) Collaboration Agreement and the Strategic Alliance Agreement with GSK, the Company is eligible to receive the annual royalties from GSK on sales of RELVAR/BREO ELLIPTA. For other products combined with a LABA from the LABA collaboration, such as ANORO ELLIPTA, royalties are upward tiering and range from 6.5% to 10%. RELVAR/BREO is a once-a-day combination inhaled respiratory medicine consisting of a LABA (VI) and an inhaled corticosteroid (ICS), FF. ANORO ELLIPTA a once-daily medicine combining a long-acting muscarinic antagonist (LAMA), umeclidinium bromide (UMEC), with a LABA.
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