Critical Survey: Madrigal Pharmaceuticals (NASDAQ:MDGL) vs. Terns Pharmaceuticals (NASDAQ:TERN)

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

Risk and Volatility

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

Institutional & Insider Ownership

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Madrigal Pharmaceuticals and Terns Pharmaceuticals, as reported by MarketBeat.com.

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

Madrigal Pharmaceuticals currently has a consensus price target of $344.33, indicating a potential upside of 7.75%. Terns Pharmaceuticals has a consensus price target of $26.92, indicating a potential upside of 287.85%. Given Terns Pharmaceuticals’ stronger consensus rating and higher possible upside, analysts plainly believe Terns Pharmaceuticals is more favorable than Madrigal Pharmaceuticals.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Madrigal Pharmaceuticals	N/A	N/A	-$373.63 million	($25.08)	-12.74
Terns Pharmaceuticals	$1.00 million	488.16	-$90.21 million	($1.32)	-5.26

Terns Pharmaceuticals has higher revenue and earnings 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Madrigal Pharmaceuticals	N/A	-73.63%	-55.13%
Terns Pharmaceuticals	N/A	-39.58%	-37.69%

Summary

Terns Pharmaceuticals beats Madrigal Pharmaceuticals on 9 of the 12 factors compared between the two stocks.

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.

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.