Head to Head Contrast: Arena Pharmaceuticals (ARNA) and Ophthotech (OPHT)

Arena Pharmaceuticals (NASDAQ:ARNA) and Ophthotech (NASDAQ:OPHT) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Insider and Institutional Ownership

81.0% of Arena Pharmaceuticals shares are owned by institutional investors. Comparatively, 45.4% of Ophthotech shares are owned by institutional investors. 1.9% of Arena Pharmaceuticals shares are owned by company insiders. Comparatively, 3.0% of Ophthotech shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Arena Pharmaceuticals and Ophthotech’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arena Pharmaceuticals $17.97 million 131.52 -$29.40 million ($2.95) -16.20
Ophthotech $209.98 million 0.28 $63.09 million ($1.67) -0.84

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Arena Pharmaceuticals and Ophthotech, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arena Pharmaceuticals 0 0 5 0 3.00
Ophthotech 0 1 0 0 2.00

Arena Pharmaceuticals presently has a consensus target price of $64.80, indicating a potential upside of 35.62%. Ophthotech has a consensus target price of $4.00, indicating a potential upside of 185.71%. Given Ophthotech’s higher possible upside, analysts plainly believe Ophthotech is more favorable than Arena Pharmaceuticals.

Profitability

This table compares Arena Pharmaceuticals and Ophthotech’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arena Pharmaceuticals -163.60% -24.36% -21.20%
Ophthotech N/A -141.53% -41.88%

Risk and Volatility

Arena Pharmaceuticals has a beta of 1.77, meaning that its stock price is 77% more volatile than the S&P 500. Comparatively, Ophthotech has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500.

About Arena Pharmaceuticals

Arena Pharmaceuticals, Inc., a biopharmaceutical company, focuses on providing novel medicines with pharmacology and pharmacokinetics to patients worldwide. Its investigational clinical programs include ralinepag (APD811), which is in Phase III trial to treat pulmonary arterial hypertension; etrasimod (APD334) for ulcerative colitis, and Crohn's disease, as well as for atopic dermatitis and other indications; and Olorinab (APD371), which is in Phase II trial for the treatment of gastrointestinal pain. It is also developing APD418, a calcium-independent myofilament derepressor for the treatment of decompensated heart failure. The company has collaboration agreements with United Therapeutics Corporation; Everest Medicines Limited; Axovant Sciences GmbH; Outpost Medicine LLC; CY Biotech Company Limited; Boehringer Ingelheim International GmbH; Eisai Co., Ltd.; and Eisai Inc. Arena Pharmaceuticals, Inc. was founded in 1997 and is based in San Diego, California.

About Ophthotech

Ophthotech Corporation, a biopharmaceutical company, develops novel therapies to treat ophthalmic diseases, with a focus on age-related and orphan retinal diseases. The company is developing Zimura, an inhibitor of complement factor C5, for dry and wet forms of age-related macular degeneration, a disorder of the central portion of the retina known as the macula. Ophthotech Corporation has a research agreement with the University of Massachusetts Medical School to utilize the minigene therapy approach and novel gene delivery technologies to target retinal diseases. The company was founded in 2007 and is based in New York, New York.

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