Novavax, Inc. (NASDAQ:NVAX) shares are up more than 71.77% this year and recently decreased -3.18% or -$0.07 to settle at $2.13. Jaguar Health, Inc. (NASDAQ:JAGX), on the other hand, is down -2.82% year to date as of 01/25/2018. It currently trades at $0.14 and has returned -20.99% during the past week.
Novavax, Inc. (NASDAQ:NVAX) and Jaguar Health, Inc. (NASDAQ:JAGX) 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.
One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Analysts expect NVAX to grow earnings at a 0.00% annual rate over the next 5 years. Comparatively, JAGX is expected to grow at a 40.00% annual rate. All else equal, JAGX’s higher growth rate would imply a greater potential for capital appreciation.
The value of a stock is simply the present value of its future free cash flows. NVAX’s free cash flow (“FCF”) per share for the trailing twelve months was -0.15. Comparatively, JAGX’s free cash flow per share was -0.05. On a percent-of-sales basis, NVAX’s free cash flow was -0.32% while JAGX converted -3.25% of its revenues into cash flow. This means that, for a given level of sales, NVAX is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Balance sheet risk is one of the biggest factors to consider before investing. NVAX has a current ratio of 3.30 compared to 0.30 for JAGX. This means that NVAX can more easily cover its most immediate liabilities over the next twelve months.
NVAX trades at a P/S of 23.56, compared to a P/B of 0.24, and a P/S of 5.79 for JAGX. NVAX 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
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. NVAX is currently priced at a -32.38% to its one-year price target of 3.15. Comparatively, JAGX is -88.8% relative to its price target of 1.25. This suggests that JAGX 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 2.60 for NVAX and 2.00 for JAGX, which implies that analysts are more bullish on the outlook for NVAX.
Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. NVAX has a short ratio of 4.68 compared to a short interest of 0.96 for JAGX. This implies that the market is currently less bearish on the outlook for JAGX.
Jaguar Health, Inc. (NASDAQ:JAGX) beats Novavax, Inc. (NASDAQ:NVAX) on a total of 7 of the 14 factors compared between the two stocks. JAGX generates a higher return on investment and has higher cash flow per share. JAGX is more undervalued relative to its price target. Finally, JAGX has better sentiment signals based on short interest.