Critical Review: XBiotech (NASDAQ:XBIT) versus Harmony Biosciences (NASDAQ:HRMY)

Harmony Biosciences (NASDAQ:HRMY) and XBiotech (NASDAQ:XBIT) are both medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, risk, dividends and earnings.

Insider & Institutional Ownership

86.2% of Harmony Biosciences shares are held by institutional investors. Comparatively, 55.7% of XBiotech shares are held by institutional investors. 30.8% of Harmony Biosciences shares are held by insiders. Comparatively, 33.1% of XBiotech shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Harmony Biosciences and XBiotech”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harmony Biosciences	$582.02 million	3.64	$128.85 million	$2.31	16.14
XBiotech	$4.01 million	49.75	-$24.56 million	($1.02)	-6.42

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Harmony Biosciences and XBiotech, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harmony Biosciences	2	0	7	0	2.56
XBiotech	0	0	0	0	N/A

Harmony Biosciences presently has a consensus target price of $41.33, indicating a potential upside of 10.84%. Given Harmony Biosciences’ higher possible upside, research analysts plainly believe Harmony Biosciences is more favorable than XBiotech.

Profitability

This table compares Harmony Biosciences and XBiotech’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harmony Biosciences	17.53%	22.97%	13.96%
XBiotech	N/A	-16.52%	-15.56%

Volatility and Risk

Harmony Biosciences has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, XBiotech has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500.

Summary

Harmony Biosciences beats XBiotech on 10 of the 13 factors compared between the two stocks.

About Harmony Biosciences

Harmony Biosciences Holdings, Inc., a commercial-stage pharmaceutical company, focuses on developing and commercializing therapies for patients with rare and other neurological diseases in the United States. The company offers WAKIX (pitolisant), a molecule with a novel mechanism of action for the treatment of excessive daytime sleepiness in adult patients with narcolepsy. It also offers HBS-102, a melanin-concentrating hormone receptor 1 for MCH neurons. The company was formerly known as Harmony Biosciences II, Inc. and changed its name to Harmony Biosciences Holdings, Inc. in February 2020. Harmony Biosciences Holdings, Inc. was incorporated in 2017 and is headquartered in Plymouth Meeting, Pennsylvania.

About XBiotech

XBiotech Inc., a biopharmaceutical company, discovers, develops, and commercializes True Human monoclonal antibodies for treating various diseases. The company focuses on developing a pipeline of product candidates targeting both inflammatory and infectious diseases. It is also developing interleukin-1 alpha therapies to treat variety of medical conditions, such as cancer, stroke, heart attack, or arthritis; and mediates tissue breakdown, angiogenesis, the formation of blood clots, malaise, muscle wasting, and inflammation. The company was incorporated in 2005 and is headquartered in Austin, Texas.