Merck KGaA (OTCMKTS:MKKGY – Get Free Report) and Heron Therapeutics (NASDAQ:HRTX – Get Free Report) are both healthcare companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.
Risk and Volatility
Merck KGaA has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, Heron Therapeutics has a beta of 1.62, meaning that its stock price is 62% more volatile than the S&P 500.
Profitability
This table compares Merck KGaA and Heron Therapeutics’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Merck KGaA | 11.20% | 8.10% | 4.58% |
| Heron Therapeutics | -22.52% | -293.02% | -10.00% |
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Merck KGaA | $23.87 billion | 0.84 | $2.95 billion | $1.94 | 16.01 |
| Heron Therapeutics | $154.90 million | 0.50 | -$20.19 million | ($0.19) | -2.14 |
Merck KGaA has higher revenue and earnings than Heron Therapeutics. Heron Therapeutics is trading at a lower price-to-earnings ratio than Merck KGaA, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent ratings for Merck KGaA and Heron Therapeutics, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Merck KGaA | 0 | 6 | 0 | 0 | 2.00 |
| Heron Therapeutics | 1 | 3 | 1 | 0 | 2.00 |
Heron Therapeutics has a consensus price target of $2.00, indicating a potential upside of 392.49%. Given Heron Therapeutics’ higher possible upside, analysts clearly believe Heron Therapeutics is more favorable than Merck KGaA.
Insider & Institutional Ownership
0.1% of Merck KGaA shares are owned by institutional investors. Comparatively, 80.0% of Heron Therapeutics shares are owned by institutional investors. 6.1% of Heron Therapeutics shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
Merck KGaA beats Heron Therapeutics on 8 of the 13 factors compared between the two stocks.
About Merck KGaA
Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company’s Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies. Its Healthcare segment discovers, develops, manufacturers, and markets prescription drugs and biopharmaceuticals for the treatment of oncology, neurology and immunology, fertility, endocrinology, as well as cardiovascular, diabetes, thyroid disorders, and multiple sclerosis; general medicines; and injection device and disease monitoring software. The Electronics segment supplies materials for the semiconductor and display industries and surface design, such as delivery systems and services, as well as surface solutions, including cosmetics, effect pigments, and functional solutions. In addition, it has in-licensing agreement with Debiopharm International SA for developing and commercializing drug candidates for the treatment of head and neck cancer; Jiangsu Hengrui Pharmaceuticals Co. Ltd. for developing, manufacturing, and commercializing drug candidates for the treatment of metastatic colorectal cancer; and Abbisko Therapeutics Co. Ltd. for developing and commercializing of drug candidates for the treatment of tenosynovial giant cell tumor, as well as license and collaboration agreement with Merck KGaA to discover two targeted protein degraders against critical oncogenic proteins. The company was founded in 1668 and is headquartered in Darmstadt, Germany. Merck KGaA operates as a subsidiary of E. Merck KGaA.
About Heron Therapeutics
Heron Therapeutics, Inc., a commercial-stage biotechnology company, focuses on enhancing the lives of patients by developing and commercializing therapeutic that enhances medical care. The company's product candidates utilize its proprietary Biochronomer, a drug delivery technology, which delivers therapeutic levels of a range of short-acting pharmacological agents over a period from days to weeks with a single administration. It offers SUSTOL (granisetron), an extended-release injection for the prevention of acute and delayed nausea and vomiting associated with moderately emetogenic chemotherapy, or anthracycline and cyclophosphamide combination chemotherapy regimens; and CINVANTI, an intravenous formulation of aprepitant, a substance P/neurokinin-1 receptor antagonist for the prevention of acute and delayed nausea and vomiting associated with highly emetogenic cancer chemotherapy, as well as nausea and vomiting associated with moderately emetogenic cancer chemotherapy. The company is also developing ZYNRELEF, a dual-acting local anesthetic that delivers a fixed-dose combination of the local anesthetic bupivacaine and a low dose of the nonsteroidal anti-inflammatory drug meloxicam; and APONVIE, an intravenous formulation of a substance P/neurokinin-1 receptor antagonist indicated for the prevention of postoperative nausea and vomiting in adults. The company was formerly known as A.P. Pharma, Inc. and changed its name to Heron Therapeutics, Inc. in January 2014. Heron Therapeutics, Inc. was founded in 1983 and is headquartered in San Diego, California.
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