Earnings

Critical Comparison: AMAG Pharmaceuticals, Inc. (AMAG) vs. Atossa Genetics Inc. (ATOS)

AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) shares are down more than -58.84% this year and recently decreased -1.21% or -$0.18 to settle at $14.32. Atossa Genetics Inc. (NASDAQ:ATOS), on the other hand, is down -78.49% year to date as of 12/13/2017. It currently trades at $0.30 and has returned -0.84% during the past week.

AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) and Atossa Genetics Inc. (NASDAQ:ATOS) are the two most active stocks in the Diagnostic Substances 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.

Cash Flow 

The amount of free cash flow available to investors is ultimately what determines the value of a stock. AMAG’s free cash flow (“FCF”) per share for the trailing twelve months was +0.69. Comparatively, ATOS’s free cash flow per share was -0.14.



Liquidity and Financial Risk

Balance sheet risk is one of the biggest factors to consider before investing. AMAG has a current ratio of 1.60 compared to 2.80 for ATOS. This means that ATOS can more easily cover its most immediate liabilities over the next twelve months. AMAG’s debt-to-equity ratio is 0.94 versus a D/E of 0.00 for ATOS. AMAG is therefore the more solvent of the two companies, and has lower financial risk.

Valuation




AMAG trades at a P/B of 0.63, and a P/S of 0.83, compared to a P/B of 1.44, for ATOS. AMAG 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

Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. AMAG is currently priced at a -18.82% to its one-year price target of 17.64. Comparatively, ATOS is -98.86% relative to its price target of 26.25. This suggests that ATOS 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 2.70 for AMAG and 2.00 for ATOS, which implies that analysts are more bullish on the outlook for AMAG.

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. AMAG has a beta of 0.80 and ATOS’s beta is 1.24. AMAG’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.AMAG has a short ratio of 10.36 compared to a short interest of 0.32 for ATOS. This implies that the market is currently less bearish on the outlook for ATOS.

Summary

Atossa Genetics Inc. (NASDAQ:ATOS) beats AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) on a total of 6 of the 13 factors compared between the two stocks. ATOS generates a higher return on investment and has lower financial risk. ATOS is more undervalued relative to its price target. Finally, ATOS has better sentiment signals based on short interest.

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