Collegium Pharmaceutical (NASDAQ: COLL) and Novartis AG (NYSE:NVS) are both medical companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Insider & Institutional Ownership

83.1% of Collegium Pharmaceutical shares are held by institutional investors. Comparatively, 11.0% of Novartis AG shares are held by institutional investors. 25.8% of Collegium Pharmaceutical shares are held by company insiders. Comparatively, 0.0% of Novartis AG shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Novartis AG pays an annual dividend of $2.30 per share and has a dividend yield of 2.7%. Collegium Pharmaceutical does not pay a dividend. Novartis AG pays out 83.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of current ratings and recommmendations for Collegium Pharmaceutical and Novartis AG, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Collegium Pharmaceutical 0 0 6 0 3.00
Novartis AG 2 7 6 0 2.27

Collegium Pharmaceutical presently has a consensus price target of $22.00, indicating a potential upside of 107.94%. Novartis AG has a consensus price target of $84.44, indicating a potential downside of 1.35%. Given Collegium Pharmaceutical’s stronger consensus rating and higher possible upside, analysts clearly believe Collegium Pharmaceutical is more favorable than Novartis AG.

Earnings & Valuation

This table compares Collegium Pharmaceutical and Novartis AG’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Collegium Pharmaceutical $7.44 million 42.04 -$97.95 million ($3.66) -2.89
Novartis AG $49.18 billion 4.08 $14.46 billion $2.74 31.24

Novartis AG has higher revenue and earnings than Collegium Pharmaceutical. Collegium Pharmaceutical is trading at a lower price-to-earnings ratio than Novartis AG, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Collegium Pharmaceutical and Novartis AG’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Collegium Pharmaceutical -1,319.39% -93.73% -74.81%
Novartis AG 13.52% 15.51% 8.41%

Volatility and Risk

Collegium Pharmaceutical has a beta of -0.12, indicating that its share price is 112% less volatile than the S&P 500. Comparatively, Novartis AG has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Summary

Novartis AG beats Collegium Pharmaceutical on 8 of the 14 factors compared between the two stocks.

About Collegium Pharmaceutical

Collegium Pharmaceutical, Inc. is a specialty pharmaceutical company. The Company is engaged in developing and commercializing abuse-deterrent products that incorporate its DETERx platform technology for the treatment of chronic pain and other diseases. Its products include Xtampza ER and ONSOLIS. Its DETERx platform provides extended-release drug delivery, while safeguarding against common methods of abuse and tampering, including crushing, chewing, and heating and injecting. Xtampza ER is designed to provide adequate pain control while maintaining its extended-release drug release profile after being subjected to common methods of abuse and accidental misuse. ONSOLIS is a Transmucosal Immediate-Release Fentanyl (TIRF) film indicated for the management of breakthrough pain in cancer patients (BTPc), 18 years of age and older, who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain.

About Novartis AG

Novartis AG is a holding company, which provides healthcare solutions. The Company is engaged in the research, development, manufacturing and marketing of a range of healthcare products led by pharmaceuticals. The Company’s segments include Innovative Medicines, Sandoz, Alcon and Corporate activities. Innovative Medicines researches, develops, manufactures, distributes and sells patented prescription medicines to develop health outcomes for patients and healthcare providers. Sandoz develops, manufactures, distributes and sells prescription medicines, as well as pharmaceutical active substances that are not protected by valid and enforceable third-party patents. Alcon researches, develops, manufactures, distributes and sells eye care products. Alcon is a provider of eye care with product offerings in eye care devices and vision care. The Company’s range of products includes pharmaceuticals and oncology medicines, generic and biosimilar medicines, and eye care devices.

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