Critical Review: Synergy Pharmaceuticals (SGYP) and Aralez Pharmaceuticals (ARLZ)

Aralez Pharmaceuticals (NASDAQ: ARLZ) and Synergy Pharmaceuticals (NASDAQ:SGYP) are both small-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

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17.8% of Aralez Pharmaceuticals shares are held by institutional investors. Comparatively, 53.1% of Synergy Pharmaceuticals shares are held by institutional investors. 6.7% of Aralez Pharmaceuticals shares are held by insiders. Comparatively, 3.8% of Synergy Pharmaceuticals shares are held 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.

Earnings & Valuation

This table compares Aralez Pharmaceuticals and Synergy Pharmaceuticals’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Aralez Pharmaceuticals $105.95 million 0.94 -$125.20 million ($1.20) -1.23
Synergy Pharmaceuticals $16.82 million 25.96 -$224.33 million ($1.02) -1.74

Aralez Pharmaceuticals has higher revenue and earnings than Synergy Pharmaceuticals. Synergy Pharmaceuticals is trading at a lower price-to-earnings ratio than Aralez Pharmaceuticals, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Aralez Pharmaceuticals and Synergy Pharmaceuticals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aralez Pharmaceuticals 0 1 2 0 2.67
Synergy Pharmaceuticals 0 3 5 0 2.63

Aralez Pharmaceuticals currently has a consensus price target of $5.00, indicating a potential upside of 237.84%. Synergy Pharmaceuticals has a consensus price target of $8.81, indicating a potential upside of 397.88%. Given Synergy Pharmaceuticals’ higher possible upside, analysts clearly believe Synergy Pharmaceuticals is more favorable than Aralez Pharmaceuticals.

Volatility & Risk

Aralez Pharmaceuticals has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, Synergy Pharmaceuticals has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Profitability

This table compares Aralez Pharmaceuticals and Synergy Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aralez Pharmaceuticals -118.18% -170.42% -21.75%
Synergy Pharmaceuticals -1,333.76% -652.66% -157.15%

Summary

Aralez Pharmaceuticals beats Synergy Pharmaceuticals on 8 of the 13 factors compared between the two stocks.

About Aralez Pharmaceuticals

Aralez Pharmaceuticals Inc. operates as a specialty pharmaceutical company in the United States and Canada. It engages in acquiring, developing, and commercializing products in the areas of cardiovascular, pain management, dermatological allergy, and other indications. It offers Zontivity for the reduction of thrombotic cardiovascular events in patients with heart attack or peripheral arterial disease; Toprol-XL, a cardioselective beta-blocker that is indicated for the treatment of hypertension; Fibricor, a fenofibric acid for the treatment of severe hypertriglyceridemia and patients with primary hypercholesterolemia or mixed dyslipidemia; and Blexten, an antihistamine drug for the symptomatic relief of allergic rhinitis and chronic spontaneous urticarial. The company also markets Cambia, a non-steroidal anti-inflammatory drug (NSAID) for the acute treatment of migraine attacks; Soriatane for the treatment of severe psoriasis and other disorders of keratinization; Proferrin, an iron supplement; Fiorinal and Fiorinal C for the relief of tension type headaches; and Bezalip SR, a pan-peroxisome proliferator-activated receptor activator to treat hyperlipidemia, as well as to increase insulin sensitivity and decrease blood glucose levels for the patients with metabolic syndrome. In addition, it provides out-licensed products, which include VIMOVO for the relief of the signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, as well as to decrease the risk of developing gastric ulcers in patients at risk of developing NSAID-associated gastric ulcers; and Treximet, a migraine medicine. The company was incorporated in 2015 and is headquartered in Mississauga, Canada.

About Synergy Pharmaceuticals

Synergy Pharmaceuticals Inc. is a biopharmaceutical company focused on the development and commercialization of gastrointestinal (GI) therapies. The Company’s product candidates include TRULANCE (plecanatide) and dolcanatide. The Company is engaged in the discovery, research and development efforts around analogs of uroguanylin for the treatment of GI diseases and disorders. TRULANCE is designed to replicate the function of uroguanylin. Dolcanatide is being evaluated for inflammatory bowel disease (IBD). TRULANCE is approved in the United States under the trademark name TRULANCE, for the treatment of adults with chronic idiopathic constipation (CIC). In addition, it is developing TRULANCE for the treatment of adults with irritable bowel syndrome with constipation (IBS-C). Dolcanatide is designed to be an analog of uroguanylin with enhanced resistance to standard digestive breakdown by proteases in the intestine.

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