Minerva Neurosciences, Inc. (NERV), a clinical-stage biopharmaceutical company, focuses on developing and commercializing product candidates for treating central nervous system diseases. Vertex Pharmaceuticals Incorporated (VRTX), a biotechnology company, develops and commercializes therapies for treating cystic fibrosis.
Increasing chronic diseases and an aging population should drive the biotechnology industry’s growth. In addition, biotech companies are integrating advanced technologies in the drug development process, which should help them grow significantly.
Data Bridge Market Research shows that the biotechnology market is expected to grow at a CAGR of 27.9% to reach $2,691,409.16 million by 2028.
With billionaire Steve Cohen’s Point72 Asset Management purchasing 470,000 shares of NERV and the company’s submission of a new drug application to the FDA, the stock has gained more than 100% this week.
While NERV has gained 165.4% over the past month, VRTX returned 3.8%. However, VRTX is the clear winner with 32.5% returns versus NERV’s 17.2% in terms of year-to-date performance.
But which stock is a better buy now? Let's find out.
Recent Financial Results
For the second quarter ending June 30, 2022, NERV’s loss from operations amounted to $6.97 million, while its net loss came in at $8.72 million. The company’s loss per share came in at $1.63.
In the second quarter ending June 30, 2022, VRTX's revenue increased 22% year-over-year to $2.20 billion. Its non-GAAP operating income grew 1571.8% from its year-ago value to $1.19 billion. Its non-GAAP net income improved 2,062.8% from its prior-year quarter to $930 million. The company's non-GAAP EPS rose 2,017.6% year-over-year to $3.60.
Expected Financial Performance
NERV’s EPS is expected to decline 54.5% in the current year and 32.4% next year.
On the other hand, VRTX’s EPS is expected to grow 2.6% in the current quarter, 9.1% in the current year, and 15.5% next year. Its EPS is expected to grow at a rate of 8% per annum over the next five years.
Profitability
VRTX is more profitable, with a gross profit margin of 48.17% compared to NERV’s 38.56%. Also, VRTX’s 38.26% net income margin compares to NERV’s 12.84%.
Furthermore, VRTX’s ROE, ROA, and ROTC of 30.24%, 0.05% and 17.15% compare with NERV’s negative 352.65%, 0.34% and 128.49%, respectively.
POWR Ratings
NERV has an overall rating of D, which equates to Sell in our proprietary POWR Ratings system. On the other hand, VRTX has an overall rating of A, which translates to Strong Buy. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
VRTX has an A grade for Quality, in sync with the company's impressive profitability. On the other hand, NERV has a C for Quality, which is justified considering its poor profitability.
Of the 396 stocks in the F-rated Biotech industry, VRTX is ranked #1, while NERV is ranked #287.
Beyond what we've stated above, we have also rated the stocks for Growth, Momentum, Stability, Value, and Sentiment. Click here to view NERV’s ratings. Get all VRTX ratings here.
The Winner
Both NERV and VRTX should benefit from the industry’s solid growth prospects. Even though NERV has gained more than 100% this week, VRTX’s higher profitability and impressive financials make it a better buy now.
Our research shows that odds of success increase when one invests in stocks with an overall rating of Strong Buy or Buy. View all the top-rated stocks in the Biotech industry here.
NERV shares were trading at $6.93 per share on Thursday morning, down $0.58 (-7.72%). Year-to-date, NERV has gained 8.15%, versus a -11.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
Minerva Neurosciences up More Than 100% This Week, but Is It a Better Pick Than Vertex Pharma? StockNews.com
