Contrasting Merus Labs International (MSLI) and Depomed (DEPO)

Depomed (NASDAQ: DEPO) and Merus Labs International (NASDAQ:MSLI) are both medical companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitabiliy, analyst recommendations, dividends and risk.

Insider & Institutional Ownership

92.0% of Depomed shares are held by institutional investors. Comparatively, 19.7% of Merus Labs International shares are held by institutional investors. 2.6% of Depomed shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Depomed and Merus Labs International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Depomed	-21.41%	-25.33%	-5.52%
Merus Labs International	-5.18%	-2.51%	-1.32%

Earnings & Valuation

This table compares Depomed and Merus Labs International’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Depomed	$441.56 million	1.34	$125.09 million	($1.53)	-6.19
Merus Labs International	N/A	N/A	N/A	($0.08)	-16.25

Depomed has higher revenue and earnings than Merus Labs International. Merus Labs International is trading at a lower price-to-earnings ratio than Depomed, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Depomed has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Merus Labs International has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Depomed and Merus Labs International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Depomed	0	4	4	0	2.50
Merus Labs International	0	6	0	0	2.00

Depomed presently has a consensus target price of $17.00, suggesting a potential upside of 79.51%. Merus Labs International has a consensus target price of $1.35, suggesting a potential upside of 3.85%. Given Depomed’s stronger consensus rating and higher probable upside, equities analysts clearly believe Depomed is more favorable than Merus Labs International.

Summary

Depomed beats Merus Labs International on 6 of the 11 factors compared between the two stocks.

About Depomed

Depomed, Inc. is a specialty pharmaceutical company. The Company focuses on pain and other central nervous system (CNS) conditions. Its products include NUCYNTA ER (tapentadol extended release tablets), NUCYNTA IR (NUCYNTA) (tapentadol), Gralise (gabapentin), CAMBIA (diclofenac potassium for oral solution), Zipsor (diclofenac potassium) and Lazanda (fentanyl). Its NUCYNTA ER (tapentadol extended release tablets) is a product for the management of pain severe enough to require daily long term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and its NUCYNTA (tapentadol) is a product for the management of moderate to severe acute pain in adults. Its Gralise (gabapentin) is a once-daily product for the management of postherpetic neuralgia. Its CAMBIA (diclofenac potassium for oral solution) is a product for the acute treatment of migraine attacks.

About Merus Labs International

Merus Labs International Inc. is a specialty pharmaceutical company. The Company is engaged in the acquisition and licensing of branded prescription pharmaceutical products. The Company’s products include Elantan, Isoket, Deponit, Sintrom, Emselex/Enablex, Surgestone, Provames, Speciafoldine, Tredemine, Salagen, Estraderm MX and Vancocin. Elantan are tablets or capsules that belong to a group of medicines called organic nitrates. Isoket belongs to a group of medicines called organic nitrates. Deponit belongs to a group of medicines called nitrates. Sintrom is an anticoagulant indicated to treat and prevent thromboembolic diseases. Emselex/Enablex is used in adults to treat overactive bladder syndrome. Surgestone is used to treat women with menstrual irregularities due to ovulation disorder, dysmenorrhea and premenstrual syndrome. Provames is used as hormone replacement therapy in postmenopausal women with symptoms of estrogen deficiency.