Comparing Hutchison China MediTech (HCM) and Heron Therapeutics (HRTX)

Hutchison China MediTech (NASDAQ: HCM) and Heron Therapeutics (NASDAQ:HRTX) are both medical companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Institutional and Insider Ownership

7.5% of Hutchison China MediTech shares are held by institutional investors. Comparatively, 97.4% of Heron Therapeutics shares are held by institutional investors. 19.9% of Heron Therapeutics shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Hutchison China MediTech and Heron Therapeutics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hutchison China MediTech $241.20 million 16.76 -$26.73 million ($0.22) -138.23
Heron Therapeutics $30.77 million 63.34 -$197.48 million $3.65 7.56

Hutchison China MediTech has higher revenue and earnings than Heron Therapeutics. Hutchison China MediTech is trading at a lower price-to-earnings ratio than Heron Therapeutics, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Hutchison China MediTech has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500. Comparatively, Heron Therapeutics has a beta of 1.86, suggesting that its share price is 86% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Hutchison China MediTech and Heron Therapeutics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hutchison China MediTech 0 0 1 0 3.00
Heron Therapeutics 0 0 12 0 3.00

Hutchison China MediTech presently has a consensus price target of $38.00, suggesting a potential upside of 24.96%. Heron Therapeutics has a consensus price target of $37.42, suggesting a potential upside of 35.57%. Given Heron Therapeutics’ higher possible upside, analysts plainly believe Heron Therapeutics is more favorable than Hutchison China MediTech.

Profitability

This table compares Hutchison China MediTech and Heron Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hutchison China MediTech N/A N/A N/A
Heron Therapeutics -641.87% -230.70% -115.42%

Summary

Heron Therapeutics beats Hutchison China MediTech on 7 of the 12 factors compared between the two stocks.

Hutchison China MediTech Company Profile

Hutchison China MediTech Limited, a biopharmaceutical company, engages in the research, development, manufacture, and sale of pharmaceuticals and healthcare products primarily in the People's Republic of China and Hong Kong. It operates through Innovation Platform and Commercial Platform segments. The company discovers and develops therapeutics in oncology and autoimmune diseases, as well as provides research and development services; and develops, manufactures, distributes, markets, and sells prescription and over-the-counter pharmaceutical products, and consumer health products under the Baiyunshan and Shang Yao brands. Its clinical drug candidates include Savolitinib, an inhibitor for treating non-small cell lung, colorectal, and gastric cancer, as well as papillary renal cell carcinoma; Fruquintinib, an oral inhibitor for the treatment of colorectal, non-small cell lung, and gastric cancer; Sulfatinib for treating neuroendocrine tumors, and thyroid and biliary tract cancer; and Epitinib for the treatment of non-small cell lung cancer, as well as for patients with glioblastoma. The company also develops Theliatinib epidermal growth factor receptor inhibitor for treating solid tumors, as well as for patients with esophageal cancer; HMPL-523, an oral inhibitor for the treatment of immunology, rheumatoid arthritis, and hematological cancers; HMPL-689, a small molecule inhibitor for the treatment of hematologic cancers, autoimmunity and transplant organ rejection, and other related inflammation diseases; HMPL-453, a small molecule inhibitor for the treatment of solid tumors; and HMPL-004 for the treatment of ulcerative colitis and Crohn's disease. It has strategic alliances with AstraZeneca AB (publ); Eli Lilly and Company; and Nestlé Health Science SA. The company was founded in 2000 and is headquartered in Central, Hong Kong. Hutchison China MediTech Limited is a subsidiary of Hutchison Healthcare Holdings Limited.

Heron Therapeutics Company Profile

Heron Therapeutics, Inc. is a biotechnology company engaged in developing pharmaceutical products for patients suffering from cancer or pain. The Company’s product candidates include SUSTOL, HTX-019 and HTX-011. All of its product candidates utilize science and technology platforms, including its Biochronomer drug delivery technology. The Company’s SUSTOL (granisetron) injection, extended release is being developed for the prevention of both acute and delayed chemotherapy-induced nausea and vomiting (CINV) associated with moderately emetogenic chemotherapy (MEC) or highly emetogenic chemotherapy (HEC). HTX-019, which is an intravenous formulation of aprepitant, a neurokinin-1 (NK1) receptor antagonist, is being developed for the prevention of CINV. HTX-011, a long-acting formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam, is being developed for the prevention of post-operative pain. HTX-011 is in Phase II clinical trials.

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