MannKind Corporation (NASDAQ:MNKD) shares are up more than 63.79% this year and recently increased 41.26% or $1.11 to settle at $3.80. Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN), on the other hand, is down -39.42% year to date as of 01/25/2018. It currently trades at $0.71 and has returned 0.06% during the past week.
MannKind Corporation (NASDAQ:MNKD) and Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
The ability to consistently grow earnings at a high compound rate is a defining characteristic of the best companies for long-term investment. Analysts expect MNKD to grow earnings at a 26.80% annual rate over the next 5 years.
Liquidity and Financial Risk
Balance sheet risk is one of the biggest factors to consider before investing. MNKD has a current ratio of 0.30 compared to 0.70 for DFFN. This means that DFFN can more easily cover its most immediate liabilities over the next twelve months.
MNKD trades at a P/S of 22.27, compared to a P/B of 1.55, for DFFN. MNKD is the cheaper of the two stocks on book value basis but is expensive in terms of P/E and P/S ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. MNKD is currently priced at a -45.71% to its one-year price target of 7.00. Comparatively, DFFN is -99.2% relative to its price target of 89.30. This suggests that DFFN is the better investment over the next year.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. MNKD has a beta of 3.10 and DFFN’s beta is -0.78. DFFN’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.MNKD has a short ratio of 10.26 compared to a short interest of 1.05 for DFFN. This implies that the market is currently less bearish on the outlook for DFFN.
Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) beats MannKind Corporation (NASDAQ:MNKD) on a total of 8 of the 13 factors compared between the two stocks. DFFN is growing fastly, has higher cash flow per share and higher liquidity. DFFN is more undervalued relative to its price target. Finally, DFFN has better sentiment signals based on short interest.