Earnings

Choosing Between Hot Stocks: Boston Scientific Corporation (BSX), Palatin Technologies, Inc. (PTN)

The shares of Boston Scientific Corporation have increased by more than 28.00% this year alone. The shares recently went down by -6.24% or -$2.11 and now trades at $31.73. The shares of Palatin Technologies, Inc. (NYSE:PTN), has jumped by 9.45% year to date as of 06/13/2018. The shares currently trade at $0.94 and have been able to report a change of -16.06% over the past one week.

The stock of Boston Scientific Corporation and Palatin Technologies, Inc. were two of the most active stocks on Wednesday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. BSX has an EBITDA margin of 21.88%, this implies that the underlying business of PTN is more profitable. The ROI of BSX is 10.40% while that of PTN is -124.40%. These figures suggest that BSX ventures generate a higher ROI than that of PTN.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, BSX’s free cash flow per share is a positive 1.52, while that of PTN is negative -0.02.

Liquidity and Financial Risk



The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for BSX is 0.80 and that of PTN is 1.90. This implies that it is easier for BSX to cover its immediate obligations over the next 12 months than PTN. The debt ratio of BSX is 0.82 compared to 0.80 for PTN. BSX can be able to settle its long-term debts and thus is a lower financial risk than PTN.

Valuation

BSX currently trades at a forward P/E of 20.25, a P/B of 6.21, and a P/S of 4.71 while PTN trades at a P/B of 18.80, and a P/S of 2.43. This means that looking at the earnings, book values and sales basis, BSX is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of BSX is currently at a -3.14% to its one-year price target of 32.76. Looking at its rival pricing, PTN is at a -82.91% relative to its price target of 5.50.




When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), BSX is given a 1.70 while 1.70 placed for PTN. This means that analysts are equally bullish on their outlook for the two stocks stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for BSX is 2.16 while that of PTN is just 5.65. This means that analysts are more bullish on the forecast for BSX stock.

Conclusion

The stock of Palatin Technologies, Inc. defeats that of Boston Scientific Corporation when the two are compared, with PTN taking 6 out of the total factors that were been considered. PTN happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, PTN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PTN is better on when it is viewed on short interest.

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