Critical Analysis: COMPASS Pathways (NASDAQ:CMPS) and Avantor (NYSE:AVTR)

COMPASS Pathways (NASDAQ:CMPS) and Avantor (NYSE:AVTR) are both medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Volatility and Risk

COMPASS Pathways has a beta of 2.21, indicating that its stock price is 121% more volatile than the S&P 500. Comparatively, Avantor has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Insider and Institutional Ownership

46.2% of COMPASS Pathways shares are held by institutional investors. Comparatively, 95.1% of Avantor shares are held by institutional investors. 3.9% of COMPASS Pathways shares are held by company insiders. Comparatively, 1.2% of Avantor shares are held by company 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 and Earnings

This table compares COMPASS Pathways and Avantor”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
COMPASS Pathways	N/A	N/A	-$155.12 million	($1.84)	-3.38
Avantor	$6.78 billion	1.35	$711.50 million	$0.99	13.54

Avantor has higher revenue and earnings than COMPASS Pathways. COMPASS Pathways is trading at a lower price-to-earnings ratio than Avantor, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for COMPASS Pathways and Avantor, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
COMPASS Pathways	1	1	6	0	2.63
Avantor	0	8	7	0	2.47

COMPASS Pathways currently has a consensus target price of $16.29, indicating a potential upside of 161.83%. Avantor has a consensus target price of $15.65, indicating a potential upside of 16.78%. Given COMPASS Pathways’ stronger consensus rating and higher possible upside, research analysts clearly believe COMPASS Pathways is more favorable than Avantor.

Profitability

This table compares COMPASS Pathways and Avantor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
COMPASS Pathways	N/A	-87.89%	-57.77%
Avantor	10.31%	11.39%	5.44%

Summary

Avantor beats COMPASS Pathways on 9 of the 13 factors compared between the two stocks.

About COMPASS Pathways

COMPASS Pathways plc operates as a mental health care company in the United Kingdom and the United States. It develops COMP360, a psilocybin therapy that is in Phase III clinical trials for the treatment of treatment-resistant depression; and is in Phase II clinical trials for the treatment of post-traumatic stress disorder and anorexia nervosa. The company was formerly known as COMPASS Rx Limited and changed its name to COMPASS Pathways plc in August 2020. COMPASS Pathways plc was incorporated in 2020 and is headquartered in London, the United Kingdom.

About Avantor

Avantor, Inc. engages in the provision of mission-critical products and services to customers in the biopharma, healthcare, education and government, advanced technologies, and applied materials industries in the Americas, Europe, Asia, the Middle East, and Africa. The company offers materials and consumables, such as purity chemicals and reagents, lab products and supplies, formulated silicone materials, customized excipients, customized single-use assemblies, process chromatography resins and columns, analytical sample prep kits, education and microbiology products, clinical trial kits, peristaltic pumps, and fluid handling tips. It also provides equipment and instrumentation products, including filtration systems, virus inactivation systems, incubators, analytical instruments, evaporators, ultra-low-temperature freezers, biological safety cabinets, and critical environment supplies. In addition, the company offers services and specialty procurements comprising onsite lab and production, clinical, equipment, procurement and sourcing, and biopharmaceutical material scale-up and development services. Further, it provides scientific research support services, such as DNA extraction, bioreactor servicing, clinical and biorepository, and compound management services. The company was founded in 1904 and is headquartered in Radnor, Pennsylvania.