Critical Analysis: PRA Health Sciences (PRAH) vs. Seattle Genetics (SGEN)

PRA Health Sciences (NASDAQ: PRAH) and Seattle Genetics (NASDAQ:SGEN) are both mid-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Profitability

This table compares PRA Health Sciences and Seattle Genetics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PRA Health Sciences 5.64% 21.66% 7.02%
Seattle Genetics -26.53% -32.41% -24.77%

Insider & Institutional Ownership

98.2% of PRA Health Sciences shares are owned by institutional investors. Comparatively, 98.9% of Seattle Genetics shares are owned by institutional investors. 2.1% of PRA Health Sciences shares are owned by insiders. Comparatively, 34.7% of Seattle Genetics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for PRA Health Sciences and Seattle Genetics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PRA Health Sciences 0 1 11 0 2.92
Seattle Genetics 1 11 9 0 2.38

PRA Health Sciences presently has a consensus price target of $91.08, indicating a potential upside of 0.71%. Seattle Genetics has a consensus price target of $63.20, indicating a potential upside of 11.64%. Given Seattle Genetics’ higher possible upside, analysts clearly believe Seattle Genetics is more favorable than PRA Health Sciences.

Volatility and Risk

PRA Health Sciences has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500. Comparatively, Seattle Genetics has a beta of 2.37, suggesting that its stock price is 137% more volatile than the S&P 500.

Valuation & Earnings

This table compares PRA Health Sciences and Seattle Genetics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PRA Health Sciences $1.81 billion 3.16 $68.17 million $1.79 50.53
Seattle Genetics $418.15 million 19.49 -$140.11 million ($0.87) -65.07

PRA Health Sciences has higher revenue and earnings than Seattle Genetics. Seattle Genetics is trading at a lower price-to-earnings ratio than PRA Health Sciences, indicating that it is currently the more affordable of the two stocks.

Summary

PRA Health Sciences beats Seattle Genetics on 9 of the 14 factors compared between the two stocks.

PRA Health Sciences Company Profile

PRA Health Sciences, Inc. is a contract research organization. The Company provides outsourced clinical development services to the biotechnology and pharmaceutical industries. The Company offers therapeutic services in areas of pharmaceutical development, including oncology, central nervous system, inflammation and infectious diseases. Its services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting. It provides its clients with clinical development service offerings, which includes both traditional, project-based Phase I through Phase IV services, as well as embedded and functional outsourcing services. As of December 31, 2016, its clinical development platform included approximately 70 offices across North America, Europe, Asia, Latin America, South Africa, Australia and the Middle East. The Company’s service offerings include product registration, strategic solutions and early development services.

Seattle Genetics Company Profile

Seattle Genetics, Inc. is a biotechnology company focused on the development and commercialization of therapies for the treatment of cancer. The Company is engaged in the development and sale of pharmaceutical products on its own behalf or in collaboration with others. The Company’s marketed product ADCETRIS, or brentuximab vedotin, is an antibody-drug conjugate (ADC). In addition to ADCETRIS, the Company’s pipeline includes other clinical-stage ADC programs, such as ASG-22ME, SGN-LIV1A, SGN-CD19A, SGN-CD19B, SGN-CD123A, SGN-352A, and ASG-15ME, as well as two immuno-oncology agents, SEA-CD40, which is based on its sugar-engineered antibody (SEA) technology, and SGN-2FF, which is a small molecule. It also has multiple preclinical and research-stage programs that employ its technologies, including SGN-CD48A and a preclinical ADC. ADCETRIS is an ADC comprising an anti-CD30 monoclonal antibody attached by a protease-cleavable linker to a microtubule disrupting agent.

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