Ardelyx (NASDAQ:ARDX – Get Free Report) and Royalty Pharma (NASDAQ:RPRX – Get Free Report) are both healthcare 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.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Ardelyx and Royalty Pharma, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ardelyx | 2 | 0 | 9 | 1 | 2.75 |
| Royalty Pharma | 0 | 0 | 8 | 0 | 3.00 |
Ardelyx currently has a consensus target price of $13.90, indicating a potential upside of 267.72%. Royalty Pharma has a consensus target price of $60.86, indicating a potential downside of 4.85%. Given Ardelyx’s higher possible upside, research analysts clearly believe Ardelyx is more favorable than Royalty Pharma.
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ardelyx | $407.32 million | 2.31 | -$61.60 million | ($0.22) | -17.18 |
| Royalty Pharma | $2.54 billion | 14.50 | $770.95 million | $1.45 | 44.11 |
Royalty Pharma has higher revenue and earnings than Ardelyx. Ardelyx is trading at a lower price-to-earnings ratio than Royalty Pharma, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Ardelyx has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Royalty Pharma has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.
Insider and Institutional Ownership
58.9% of Ardelyx shares are held by institutional investors. Comparatively, 54.3% of Royalty Pharma shares are held by institutional investors. 5.3% of Ardelyx shares are held by company insiders. Comparatively, 18.8% of Royalty Pharma 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.
Profitability
This table compares Ardelyx and Royalty Pharma’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ardelyx | -12.35% | -36.00% | -10.77% |
| Royalty Pharma | 32.14% | 30.01% | 14.91% |
Summary
Royalty Pharma beats Ardelyx on 10 of the 15 factors compared between the two stocks.
About Ardelyx
Ardelyx, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines to treat gastrointestinal and cardiorenal therapeutic areas in the United States and internationally. The company’s lead product candidate is tenapanor for the treatment of patients with irritable bowel syndrome with constipation. It also develops XPHOZAH, which is in Phase III clinical trial to reduce serum phosphorus in adults with chronic kidney disease (CKD)on dialysis, or hyperphosphatemia; RDX013, a potassium secretagogue, for the treatment of elevated serum potassium, or hyperkalemia, a problem among patients with kidney and/or heart failure; and RDX020, for adult patients with metabolic acidosis, a serious electrolyte disorder. The company has agreements with Kyowa Kirin, Fosun Pharmaceutical Industrial Development Co. Ltd., and Knight Therapeutics, Inc. for the development and commercialization of tenapanor in their respective territories. The company was formerly known as Nteryx, Inc. and changed its name to Ardelyx, Inc. in June 2008. Ardelyx, Inc. was incorporated in 2007 and is headquartered in Waltham, Massachusetts.
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.
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