Comparing Amarin (NASDAQ:AMRN) and Royalty Pharma (NASDAQ:RPRX)

Amarin (NASDAQ:AMRN) and Royalty Pharma (NASDAQ:RPRX) are both healthcare companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.

Analyst Ratings

This is a breakdown of current ratings and price targets for Amarin and Royalty Pharma, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amarin	2	1	0	0	1.33
Royalty Pharma	0	0	8	0	3.00

Amarin presently has a consensus target price of $13.00, suggesting a potential downside of 4.62%. Royalty Pharma has a consensus target price of $60.86, suggesting a potential downside of 4.85%. Given Amarin’s higher possible upside, analysts plainly believe Amarin is more favorable than Royalty Pharma.

Valuation & Earnings

This table compares Amarin and Royalty Pharma”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amarin	$213.65 million	1.35	-$38.80 million	($0.99)	-13.77
Royalty Pharma	$2.38 billion	15.47	$770.95 million	$1.45	44.11

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

Insider and Institutional Ownership

22.3% of Amarin shares are held by institutional investors. Comparatively, 54.3% of Royalty Pharma shares are held by institutional investors. 4.2% of Amarin shares are held by insiders. Comparatively, 18.8% of Royalty Pharma shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Amarin has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Royalty Pharma has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500.

Profitability

This table compares Amarin and Royalty Pharma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Amarin	-14.56%	-0.20%	-0.14%
Royalty Pharma	32.14%	30.01%	14.91%

Summary

Royalty Pharma beats Amarin on 12 of the 14 factors compared between the two stocks.

About Amarin

Amarin Corporation plc, a pharmaceutical company, engages in the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States, European countries, Canada, Lebanon, and the United Arab Emirates. The company offers VASCEPA, a prescription-only omega-3 fatty acid product, used as an adjunct to diet for reducing triglyceride levels in adult patients with severe hypertriglyceridemia. It sells its products principally to wholesalers and specialty pharmacy providers. The company has a collaboration with Mochida Pharmaceutical Co., Ltd. to develop and commercialize drug products and indications based on the active pharmaceutical ingredient in Vascepa. The company was formerly known as Ethical Holdings plc and changed its name to Amarin Corporation plc in 1999. Amarin Corporation plc was incorporated in 1989 and is headquartered in Dublin, Ireland.

About Royalty Pharma

Royalty Pharma plc operates as a buyer of biopharmaceutical royalties and a funder of innovations in the biopharmaceutical industry in the United States. It is also involved in the identification, evaluation, and acquisition of royalties on various biopharmaceutical therapies. In addition, the company collaborates with innovators from academic institutions, research hospitals and not-for-profits, small and mid-cap biotechnology companies, and pharmaceutical companies. Its portfolio consists of royalties on approximately 35 commercial products and 14 development-stage product candidates that address various therapeutic areas, such as rare disease, cancer, neuroscience, immunology, respiratory, infectious disease, hematology, and diabetes. The company was founded in 1996 and is based in New York, New York.