Epizyme, Inc. (NASDAQ:EPZM) shares are down more than -0.83% this year and recently increased 3.90% or $0.45 to settle at $12.00. CASI Pharmaceuticals, Inc. (NASDAQ:CASI), on the other hand, is up 166.96% year to date as of 11/29/2017. It currently trades at $3.07 and has returned -15.43% during the past week.
Epizyme, Inc. (NASDAQ:EPZM) and CASI Pharmaceuticals, Inc. (NASDAQ:CASI) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
The value of a stock is simply the present value of its future free cash flows. EPZM’s free cash flow (“FCF”) per share for the trailing twelve months was -0.65. Comparatively, CASI’s free cash flow per share was -.
Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. EPZM has a current ratio of 13.70 compared to 7.90 for CASI. This means that EPZM can more easily cover its most immediate liabilities over the next twelve months. EPZM’s debt-to-equity ratio is 0.00 versus a D/E of 0.09 for CASI. CASI is therefore the more solvent of the two companies, and has lower financial risk.
EPZM trades at a P/B of 2.68, and a P/S of 84.50, compared to a P/B of 10.96, for CASI. EPZM is the cheaper of the two stocks on book value basis but is expensive in terms of P/E and P/S ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. EPZM is currently priced at a -47.07% to its one-year price target of 22.67. Comparatively, CASI is 2.33% relative to its price target of 3.00. This suggests that EPZM is the better investment over the next year.
The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 1.60 for EPZM and 2.00 for CASI, which implies that analysts are more bullish on the outlook for CASI.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. EPZM has a beta of 2.16 and CASI’s beta is 0.93. CASI’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.EPZM has a short ratio of 9.42 compared to a short interest of 0.33 for CASI. This implies that the market is currently less bearish on the outlook for CASI.
CASI Pharmaceuticals, Inc. (NASDAQ:CASI) beats Epizyme, Inc. (NASDAQ:EPZM) on a total of 5 of the 13 factors compared between the two stocks. CASI higher liquidity and has higher cash flow per share. Finally, CASI has better sentiment signals based on short interest.