Critical Comparison: Taro Pharmaceutical Industries (TARO) vs. Akorn (AKRX)

Taro Pharmaceutical Industries (NYSE: TARO) and Akorn (NASDAQ:AKRX) are both mid-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, dividends, earnings and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Taro Pharmaceutical Industries and Akorn, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Taro Pharmaceutical Industries 0 1 0 0 2.00
Akorn 1 8 1 0 2.00

Akorn has a consensus price target of $30.14, suggesting a potential downside of 9.51%. Given Akorn’s higher possible upside, analysts plainly believe Akorn is more favorable than Taro Pharmaceutical Industries.

Earnings & Valuation

This table compares Taro Pharmaceutical Industries and Akorn’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Taro Pharmaceutical Industries $879.39 million 5.39 $456.35 million $8.12 14.42
Akorn $1.12 billion 3.73 $184.24 million $0.99 33.65

Taro Pharmaceutical Industries has higher revenue, but lower earnings than Akorn. Taro Pharmaceutical Industries is trading at a lower price-to-earnings ratio than Akorn, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

13.8% of Taro Pharmaceutical Industries shares are held by institutional investors. Comparatively, 68.7% of Akorn shares are held by institutional investors. 13.8% of Taro Pharmaceutical Industries shares are held by insiders. Comparatively, 28.2% of Akorn shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Taro Pharmaceutical Industries has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Akorn has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Profitability

This table compares Taro Pharmaceutical Industries and Akorn’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Taro Pharmaceutical Industries 44.07% 15.66% 14.18%
Akorn 7.79% 15.14% 6.51%

Summary

Akorn beats Taro Pharmaceutical Industries on 7 of the 13 factors compared between the two stocks.

About Taro Pharmaceutical Industries

Taro Pharmaceutical Industries Ltd. (Taro) is a science-based pharmaceutical company. The Company operates principally through three entities: Taro Pharmaceutical Industries Ltd. (Taro Israel), and two of its subsidiaries, Taro Pharmaceuticals Inc. (Taro Canada) and Taro U.S.A. The Company markets over 200 pharmaceutical products in over 25 countries. The Company’s owned product brands include Rokacet, with generic names, such as acetaminophen, codeine and caffeine; Topicort, with the generic name, desoximetasone; Etopan, with the generic name etodolac, and Ovide, with the generic name, malathion, among others. The Company’s other generic products include acetazolamide, adapalene, alclometasone dipropionate, amiodarone hydrochloride, ammonium lactate, augmented betamethasone dipropionate, cetirizine hydrochloride, clobetasol propionate, clomipramine hydrochloride, clorazepate dipotassium, fluorouracil, ketoconazole, metronidazole, mupirocin and warfarin sodium, among others.

About Akorn

Akorn Inc. (Akorn), together with its subsidiaries, is a specialty generic pharmaceutical company that develops, manufactures and markets generic and branded prescription pharmaceuticals, as well as private-label over-the-counter (OTC) consumer health products and animal health pharmaceuticals. The Company operates through two segments: Prescription Pharmaceuticals and the Consumer Health. The Prescription Pharmaceuticals segment consists of generic and branded prescription pharmaceuticals in a range of dosage forms, including sterile ophthalmics, injectables and inhalants and non-sterile oral liquids, topicals and nasal sprays and otics. The Consumer Health segment consists of branded and private-label OTC products and animal health products dispensed by veterinary professionals. Its branded and private-label OTC products are focused on ophthalmics, including a dry eye treatment TheraTears Therapy for Your Eyes.

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