BioDelivery Sciences International (NASDAQ: BDSI) and Novartis (NYSE:NVS) are both healthcare companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Risk & Volatility

BioDelivery Sciences International has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, Novartis has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Profitability

This table compares BioDelivery Sciences International and Novartis’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BioDelivery Sciences International 10.40% 33.83% 6.43%
Novartis 13.73% 15.77% 8.46%

Institutional & Insider Ownership

44.3% of BioDelivery Sciences International shares are owned by institutional investors. Comparatively, 10.9% of Novartis shares are owned by institutional investors. 7.7% of BioDelivery Sciences International shares are owned by insiders. Comparatively, 0.0% of Novartis shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares BioDelivery Sciences International and Novartis’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BioDelivery Sciences International $15.55 million 9.70 -$67.13 million $0.09 30.00
Novartis $48.52 billion 4.24 $6.71 billion $2.81 30.94

Novartis has higher revenue and earnings than BioDelivery Sciences International. BioDelivery Sciences International is trading at a lower price-to-earnings ratio than Novartis, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for BioDelivery Sciences International and Novartis, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BioDelivery Sciences International 0 1 5 0 2.83
Novartis 4 5 4 0 2.00

BioDelivery Sciences International presently has a consensus target price of $4.50, suggesting a potential upside of 66.67%. Novartis has a consensus target price of $84.41, suggesting a potential downside of 2.92%. Given BioDelivery Sciences International’s stronger consensus rating and higher possible upside, research analysts clearly believe BioDelivery Sciences International is more favorable than Novartis.

Dividends

Novartis pays an annual dividend of $2.30 per share and has a dividend yield of 2.6%. BioDelivery Sciences International does not pay a dividend. Novartis pays out 81.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

BioDelivery Sciences International beats Novartis on 9 of the 16 factors compared between the two stocks.

BioDelivery Sciences International Company Profile

BioDelivery Sciences International, Inc. is a specialty pharmaceutical company. The Company develops and commercializes, either on its own or in partnerships with third parties, applications of approved therapeutics to address unmet medical needs using drug delivery technologies. The Company develops pharmaceutical products aimed principally in the areas of pain management and addiction. The Company’s products utilize the BioErodible MucoAdhesive (BEMA) drug delivery technology, a small, erodible polymer film for application to the buccal mucosa (the lining inside the cheek). The Company’s United Sates Food and Drug Administration (FDA) approved product, ONSOLIS (fentanyl buccal soluble film), as well as its approved products BUNAVAIL (buprenorphine and naloxone buccal film) buccal film and BELBUCA (buprenorphine) buccal film, utilize BEMA technology.

Novartis Company Profile

Novartis AG is a holding company, which provides healthcare solutions. The Company is engaged in the research, development, manufacturing and marketing of a range of healthcare products led by pharmaceuticals. The Company’s segments include Innovative Medicines, Sandoz, Alcon and Corporate activities. Innovative Medicines researches, develops, manufactures, distributes and sells patented prescription medicines to develop health outcomes for patients and healthcare providers. Sandoz develops, manufactures, distributes and sells prescription medicines, as well as pharmaceutical active substances that are not protected by valid and enforceable third-party patents. Alcon researches, develops, manufactures, distributes and sells eye care products. Alcon is a provider of eye care with product offerings in eye care devices and vision care. The Company’s range of products includes pharmaceuticals and oncology medicines, generic and biosimilar medicines, and eye care devices.

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