Financial Analysis: AbbVie (ABBV) versus Novan (NOVN)

AbbVie (NYSE: ABBV) and Novan (NASDAQ:NOVN) are both medical companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for AbbVie and Novan, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AbbVie 0 6 7 0 2.54
Novan 0 1 3 0 2.75

AbbVie presently has a consensus price target of $83.75, suggesting a potential downside of 3.03%. Novan has a consensus price target of $17.24, suggesting a potential upside of 207.35%. Given Novan’s stronger consensus rating and higher possible upside, analysts plainly believe Novan is more favorable than AbbVie.

Profitability

This table compares AbbVie and Novan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AbbVie 24.77% 150.27% 12.52%
Novan N/A -194.61% -99.61%

Earnings and Valuation

This table compares AbbVie and Novan’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AbbVie $26.71 billion 5.15 $11.57 billion $4.07 21.22
Novan $768,999.00 116.61 -$49.04 million ($7.93) -0.71

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

Insider & Institutional Ownership

68.3% of AbbVie shares are held by institutional investors. Comparatively, 6.1% of Novan shares are held by institutional investors. 0.2% of AbbVie shares are held by insiders. Comparatively, 10.7% of Novan shares are held by 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.

Dividends

AbbVie pays an annual dividend of $2.56 per share and has a dividend yield of 3.0%. Novan does not pay a dividend. AbbVie pays out 62.9% of its earnings in the form of a dividend. AbbVie has increased its dividend for 44 consecutive years.

Summary

AbbVie beats Novan on 10 of the 15 factors compared between the two stocks.

About AbbVie

AbbVie Inc. (AbbVie) is a research-based biopharmaceutical company. The Company is engaged in the discovery, development, manufacture and sale of a range of pharmaceutical products. Its products are focused on treating conditions, such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson’s disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis, and other serious health conditions. It offers products in various categories, including HUMIRA (adalimumab), Oncology products, Virology Products, Additional Virology products, Metabolics/Hormones products, Endocrinology products and other products, which include Duopa and Duodopa (carbidopa and levodopa), Anesthesia products and ZINBRYTA (daclizumab).

About Novan

Novan, Inc. is a late-stage pharmaceutical company. The Company is engaged in the development and commercialization of therapies using its nitric oxide platform. The Company develops product candidates using its Nitricil technology, which enables the Company to engineer tunable new chemical entities (NCEs). The Company’s formulation science enables it to further tune the release of nitric oxide when applied to the skin by using the combinations of inactive ingredients. It is developing SB204 for the treatment of acne vulgaris in Phase III. The Company is developing its product candidate, SB206, for the treatment of external genital and perianal warts in Phase II. It is developing SB208, an investigational topical anti-fungal for the treatment of fungal infections of the skin and nails. It is developing SB204 for the treatment of inflammatory skin diseases. Its pipeline also includes SB414, a topical cream product candidate.

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