Vertex Pharmaceuticals (NASDAQ:VRTX) and Novus Therapeutics (NASDAQ:NVUS) are both medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Insider & Institutional Ownership

94.7% of Vertex Pharmaceuticals shares are owned by institutional investors. Comparatively, 26.9% of Novus Therapeutics shares are owned by institutional investors. 0.7% of Vertex Pharmaceuticals shares are owned by insiders. Comparatively, 5.7% of Novus Therapeutics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Vertex Pharmaceuticals and Novus Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vertex Pharmaceuticals 64.13% 21.73% 15.26%
Novus Therapeutics N/A -116.18% -99.51%

Analyst Ratings

This is a breakdown of recent recommendations for Vertex Pharmaceuticals and Novus Therapeutics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vertex Pharmaceuticals 0 8 14 0 2.64
Novus Therapeutics 0 0 1 0 3.00

Vertex Pharmaceuticals currently has a consensus target price of $207.79, indicating a potential upside of 12.35%. Novus Therapeutics has a consensus target price of $10.00, indicating a potential upside of 1,173.89%. Given Novus Therapeutics’ stronger consensus rating and higher probable upside, analysts plainly believe Novus Therapeutics is more favorable than Vertex Pharmaceuticals.

Risk and Volatility

Vertex Pharmaceuticals has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500. Comparatively, Novus Therapeutics has a beta of 2.87, indicating that its stock price is 187% more volatile than the S&P 500.

Valuation and Earnings

This table compares Vertex Pharmaceuticals and Novus Therapeutics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vertex Pharmaceuticals $3.05 billion 15.60 $2.10 billion $2.83 65.35
Novus Therapeutics N/A N/A -$14.06 million ($1.56) -0.50

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

Summary

Vertex Pharmaceuticals beats Novus Therapeutics on 9 of the 13 factors compared between the two stocks.

Vertex Pharmaceuticals Company Profile

Vertex Pharmaceuticals Incorporated engages in developing and commercializing therapies for treating cystic fibrosis. The company markets SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO to treat patients with cystic fibrosis who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene. It is also developing VX-659 and VX-445 that are Phase III clinical trials; VX-121, a cystic fibrosis transmembrane conductance regulator corrector that is in Phase I/II clinical trial; VX-150, an inhibitor that is in Phase IIb clinical trial for acute pain; CTX001 that is in Phase I/II clinical trial for the treatment of beta-thalassemia and sickle cell diseases; and a novel drug candidate, which is in Phase I clinical trial for the treatment for alpha-1 antitrypsin deficiency. The company sells its products primarily to specialty pharmacy and specialty distributors in the United States, as well as specialty distributors and retail chains, and hospitals and clinics internationally. Vertex Pharmaceuticals Incorporated has collaborations with CRISPR Therapeutics AG; Arbor Biotechnologies, Inc.; Moderna Therapeutics, Inc.; Genomics plc; Merck KGaA; Darmstadt, Germany; X-Chem, Inc.; Janssen Pharmaceuticals, Inc.; Merck KGaA; and Kymera Therapeutics. The company was founded in 1989 and is headquartered in Boston, Massachusetts.

Novus Therapeutics Company Profile

Novus Therapeutics, Inc., a pharmaceutical company, focuses on developing products for patients with disorders of ear, nose, and throat. Its lead product is (OP-02), a surfactant-based combination drug product for patients at risk for, or with, otitis media (OM) (middle ear inflammation with or without infection). The company also has a foam-based drug delivery technology (OP-01) that could be used to deliver drugs into the ear, nose, and sinus cavities. Novus Therapeutics, Inc. is headquartered in Irvine, California.

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