Analyzing Terns Pharmaceuticals (NASDAQ:TERN) & Madrigal Pharmaceuticals (NASDAQ:MDGL)

Terns Pharmaceuticals (NASDAQ:TERN) and Madrigal Pharmaceuticals (NASDAQ:MDGL) are both medical companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, risk and dividends.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Terns Pharmaceuticals and Madrigal Pharmaceuticals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Terns Pharmaceuticals	0	1	5	0	2.83
Madrigal Pharmaceuticals	1	2	10	0	2.69

Terns Pharmaceuticals presently has a consensus price target of $26.92, indicating a potential upside of 268.72%. Madrigal Pharmaceuticals has a consensus price target of $347.33, indicating a potential downside of 0.96%. Given Terns Pharmaceuticals’ stronger consensus rating and higher probable upside, equities analysts clearly believe Terns Pharmaceuticals is more favorable than Madrigal Pharmaceuticals.

Earnings & Valuation

This table compares Terns Pharmaceuticals and Madrigal Pharmaceuticals”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terns Pharmaceuticals	$1.00 million	513.48	-$90.21 million	($1.32)	-5.53
Madrigal Pharmaceuticals	$76.81 million	99.58	-$373.63 million	($25.08)	-13.98

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

Insider & Institutional Ownership

98.3% of Terns Pharmaceuticals shares are held by institutional investors. Comparatively, 98.5% of Madrigal Pharmaceuticals shares are held by institutional investors. 15.1% of Terns Pharmaceuticals shares are held by insiders. Comparatively, 22.8% of Madrigal Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Terns Pharmaceuticals and Madrigal Pharmaceuticals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Terns Pharmaceuticals	N/A	-39.58%	-37.69%
Madrigal Pharmaceuticals	N/A	-71.78%	-53.25%

Risk & Volatility

Terns Pharmaceuticals has a beta of -0.32, meaning that its stock price is 132% less volatile than the S&P 500. Comparatively, Madrigal Pharmaceuticals has a beta of -0.46, meaning that its stock price is 146% less volatile than the S&P 500.

Summary

Terns Pharmaceuticals beats Madrigal Pharmaceuticals on 9 of the 13 factors compared between the two stocks.

About Terns Pharmaceuticals

Terns Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, develops small-molecule product candidates for the treatment of oncology, metabolic dysfunction-associated steatohepatitis (MASH), and obesity. The company develops TERN-701, an allosteric BCR-ABL tyrosine kinase inhibitor (TKI) that is in phase 1 clinical trial for chronic myeloid leukemia (CML), a form of cancer that starts in bone marrow. It also develops TERN-501, a thyroid hormone receptor beta agonist with enhanced liver distribution and metabolic stability that is in Phase IIa clinical trial for the treatment of MASH; and TERN-601, a small-molecule Glucagon-Like Peptide-1 receptor agonist program that is intended to orally be administered for obesity. The company was incorporated in 2016 and is headquartered in Foster City, California.

About Madrigal Pharmaceuticals

Madrigal Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focuses on the development of therapeutics for the treatment of non-alcoholic steatohepatitis (NASH) in the United States. Its lead product candidate is resmetirom, a liver-directed thyroid hormone receptor beta agonist, which is in Phase 3 clinical trials for treating NASH. The company is headquartered in West Conshohocken, Pennsylvania.