Innoviva (NASDAQ: INVA) and Johnson & Johnson (NYSE:JNJ) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Innoviva and Johnson & Johnson, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Innoviva 1 3 1 0 2.00
Johnson & Johnson 4 4 10 0 2.33

Innoviva currently has a consensus price target of $13.00, suggesting a potential downside of 3.20%. Johnson & Johnson has a consensus price target of $145.12, suggesting a potential upside of 1.87%. Given Johnson & Johnson’s stronger consensus rating and higher probable upside, analysts clearly believe Johnson & Johnson is more favorable than Innoviva.

Dividends

Johnson & Johnson pays an annual dividend of $3.36 per share and has a dividend yield of 2.4%. Innoviva does not pay a dividend. Johnson & Johnson pays out 58.3% of its earnings in the form of a dividend. Johnson & Johnson has increased its dividend for 54 consecutive years.

Profitability

This table compares Innoviva and Johnson & Johnson’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Innoviva 52.91% -33.55% 26.40%
Johnson & Johnson 21.28% 27.38% 13.20%

Valuation and Earnings

This table compares Innoviva and Johnson & Johnson’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Innoviva $133.57 million 10.86 $59.53 million $0.87 15.44
Johnson & Johnson $71.89 billion 5.32 $16.54 billion $5.76 24.73

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

Insider & Institutional Ownership

74.5% of Innoviva shares are held by institutional investors. Comparatively, 65.9% of Johnson & Johnson shares are held by institutional investors. 1.6% of Innoviva shares are held by insiders. Comparatively, 0.2% of Johnson & Johnson shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Innoviva has a beta of 2.52, indicating that its stock price is 152% more volatile than the S&P 500. Comparatively, Johnson & Johnson has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500.

Summary

Johnson & Johnson beats Innoviva on 10 of the 17 factors compared between the two stocks.

Innoviva Company Profile

Innoviva, Inc., formerly Theravance, Inc., is engaged in the development, commercialization and financial management of bio-pharmaceuticals. It focuses on the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate (FF)/vilanterol (VI)) and ANORO ELLIPTA (umeclidinium bromide/vilanterol (UMEC/VI)). Under the Long-Acting Beta2 Agonist (LABA) Collaboration Agreement and the Strategic Alliance Agreement with GSK, the Company is eligible to receive the annual royalties from GSK on sales of RELVAR/BREO ELLIPTA. For other products combined with a LABA from the LABA collaboration, such as ANORO ELLIPTA, royalties are upward tiering and range from 6.5% to 10%. RELVAR/BREO is a once-a-day combination inhaled respiratory medicine consisting of a LABA (VI) and an inhaled corticosteroid (ICS), FF. ANORO ELLIPTA a once-daily medicine combining a long-acting muscarinic antagonist (LAMA), umeclidinium bromide (UMEC), with a LABA.

Johnson & Johnson Company Profile

Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical and Medical Devices. Its primary focus is products related to human health and well-being. The Consumer segment includes a range of products used in the baby care, oral care, skin care, over-the-counter pharmaceutical, women’s health and wound care markets. The Pharmaceutical segment is focused on five therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. The Medical Devices segment includes a range of products used in the orthopedic, surgery, cardiovascular, diabetes care and vision care fields. Its research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom.

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