Heska (NASDAQ:HSKA) and Denali Therapeutics (NASDAQ:DNLI) Financial Analysis

Heska (NASDAQ:HSKA) and Denali Therapeutics (NASDAQ:DNLI) are both small-cap medical companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, institutional ownership and risk.

Institutional & Insider Ownership

88.9% of Heska shares are owned by institutional investors. Comparatively, 71.7% of Denali Therapeutics shares are owned by institutional investors. 14.0% of Heska shares are owned by company insiders. Comparatively, 21.2% of Denali Therapeutics shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Heska and Denali Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Heska 3.63% 8.36% 6.48%
Denali Therapeutics -38.84% -10.23% -8.40%

Volatility & Risk

Heska has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Denali Therapeutics has a beta of 2.12, meaning that its share price is 112% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Heska and Denali Therapeutics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heska 0 4 1 0 2.20
Denali Therapeutics 0 1 2 0 2.67

Heska currently has a consensus target price of $100.67, suggesting a potential upside of 25.36%. Denali Therapeutics has a consensus target price of $26.33, suggesting a potential upside of 31.14%. Given Denali Therapeutics’ stronger consensus rating and higher possible upside, analysts clearly believe Denali Therapeutics is more favorable than Heska.

Earnings & Valuation

This table compares Heska and Denali Therapeutics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Heska $127.45 million 4.88 $5.85 million $1.42 56.55
Denali Therapeutics $129.16 million 14.84 -$36.24 million ($0.39) -51.49

Heska has higher earnings, but lower revenue than Denali Therapeutics. Denali Therapeutics is trading at a lower price-to-earnings ratio than Heska, indicating that it is currently the more affordable of the two stocks.

Summary

Denali Therapeutics beats Heska on 7 of the 13 factors compared between the two stocks.

About Heska

Heska Corporation manufactures, sells, and markets veterinary diagnostic and specialty products for canine and feline healthcare markets in the United States, Canada, Europe, and internationally. The company's Core Companion Animal segment offers Element DC and DRI-CHEM 7000 veterinary chemistry analyzers for blood chemistry and electrolyte analysis; Element HT5 and HemaTrue veterinary hematology analyzers to measure blood cell and platelet count, and hemoglobin levels; Element POC blood gas and electrolyte analyzers; Element i immunodiagnostic analyzers; Element COAG veterinary analyzers; and IV infusion pumps. It also provides digital radiography hardware and mobile digital radiography products, as well as ultrasound systems; Cloudbank, a Web-based image storage solution; ViewCloud, a picture archival and communications system for Cloudbank; point-of-care heartworm diagnostic test products for dogs and cats; Tri-Heart Plus chewable tablets for the treatment of canine heartworm infection, and treatment and control of ascarid and hookworm infections; and allergy products and services, including ALLERCEPT definitive allergen panels, and therapy shots or drops. The company's Other Vaccines and Pharmaceuticals segment offers a line of bovine vaccines; biological and pharmaceutical products for other animal health companies; and various turnkey services comprising research, licensing, production, labeling, and packaging, as well as provides validation support and distribution services. Heska Corporation sells its products to veterinarians through a field organization, a telephone sales force, and third party distributors; and trade shows, print advertising, and other distribution relationships. The company was formerly known as Paravax, Inc. and changed its name to Heska Corporation in 1995. Heska Corporation was founded in 1988 and is headquartered in Loveland, Colorado.

About Denali Therapeutics

Denali Therapeutics Inc., a biopharmaceutical company, discovers and develops therapeutic candidates for neurodegenerative diseases in the United States. The company offers leucine-rich repeat kinase 2 (LRRK2) inhibitor product candidates, including DNL201 and DNL151, which are in Phase 1 clinical trials for Parkinson's disease. It is also developing receptor interacting serine/threonine protein kinase 1 (RIPK1) product candidates, such as DNL747, a selective and brain-penetrant small molecule RIPK1 inhibitor product candidate that is in Phase 1b clinical trial for Alzheimer's disease and amyotrophic lateral sclerosis (ALS). In addition, the company develops enzyme transport vehicle: iduronate 2-sulfatase, an enzyme replacement therapy program for MPS II, a lysosomal storage disorder; antibody transport vehicle (ATV): alpha-synuclein (aSyn) program, a protein that spreads throughout the brain in Parkinson's disease; ATV: triggering receptor expressed in myeloid cells 2, a therapeutic candidate designed to rescue microglial function in Alzheimer's disease; and ATV: Tau, a therapeutic targeting the spreading of Tau. Further, it is developing LF1, an undisclosed large molecule program to treat neurodegenerative diseases. Additionally, the company has various seed programs under the research, discovery, and preclinical stages of development. Denali Therapeutics Inc. has collaboration agreement with Takeda Pharmaceutical Company and Genentech, Inc., Sanofi, F-star Gamma Limited, F-star Biotechnologische Forschungs-Und Entwicklungsges M.B.H, F-star Biotechnology Limited, SIRION Biotech GmbH, Genzyme Corporation, Harvard University, the Michael J. Fox Foundation, and Centogene. The company was formerly known as SPR Pharma Inc. and changed its name to Denali Therapeutics Inc. in March 2015. Denali Therapeutics Inc. was incorporated in 2013 and is based in South San Francisco, California.

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