Merus (NASDAQ:MRUS) & Mallinckrodt (OTCMKTS:MNKKQ) Critical Survey

Merus (NASDAQ:MRUS) and Mallinckrodt (OTCMKTS:MNKKQ) are both medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, dividends, profitability, valuation, institutional ownership and earnings.

Insider & Institutional Ownership

96.1% of Merus shares are owned by institutional investors. 4.6% of Merus shares are owned by insiders. Comparatively, 3.6% of Mallinckrodt shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Merus and Mallinckrodt, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merus	0	0	12	0	3.00
Mallinckrodt	0	0	0	0	N/A

Merus currently has a consensus target price of $73.60, suggesting a potential upside of 29.62%. Given Merus’ higher probable upside, analysts clearly believe Merus is more favorable than Mallinckrodt.

Profitability

This table compares Merus and Mallinckrodt’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merus	-390.36%	-44.13%	-33.08%
Mallinckrodt	-56.33%	-59.80%	-16.98%

Valuation & Earnings

This table compares Merus and Mallinckrodt’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merus	$43.95 million	75.82	-$154.94 million	($2.77)	-20.50
Mallinckrodt	$1.91 billion	0.00	-$911.20 million	N/A	N/A

Merus has higher earnings, but lower revenue than Mallinckrodt.

Summary

Merus beats Mallinckrodt on 7 of the 10 factors compared between the two stocks.

About Merus

Merus N.V., a clinical-stage immuno-oncology company, engages in the development of antibody therapeutics in the Netherlands. Its bispecific antibody candidate pipeline includes Zenocutuzumab (MCLA-128), which is in a phase 2 clinical trials for the treatment of patients with metastatic breast cancer and castration-resistant prostate cancer, as well as in Phase 1/2 clinical trials for the treatment of solid tumors that harbor Neuregulin 1. The company is also developing MCLA-158, which is in a phase I clinical trial for the treatment of solid tumors; MCLA-145, which is in phase 1 clinical trials for the treatment of solid tumors; MCLA-129, which is in phase 1/2 clinical trials for the treatment of patients with advanced non-small cell lung cancer and other solid tumors; and ONO-4685 that is Phase 1 clinical trial to treat relapsed/refractory T cell lymphoma. In addition, it has collaboration agreement with Betta Pharmaceuticals Co. Ltd for the research and development of stage bispecific antibody candidates include MCLA-129; collaboration with Incyte Corporation for the development of MCLA-145; and collaboration with Gilead Sciences, Inc. to discover novel antibody-based trispecific T-cell engagers. The company was incorporated in 2003 and is headquartered in Utrecht, the Netherlands.

About Mallinckrodt

Mallinckrodt plc develops, manufactures, markets, and distributes specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally. It operates in two segments, Specialty Brands and Specialty Generics. The company markets branded pharmaceutical products for autoimmune and rare diseases in the areas of neurology, rheumatology, nephrology, ophthalmology, pulmonology, and oncology; immunotherapy and neonatal respiratory critical care therapies; analgesics; cultured skin substitutes; and gastrointestinal products. It offers Acthar Gel, a repository corticotropin injection for rheumatoid arthritis, infantile spasms, systemic lupus erythematosus, multiple sclerosis, systemic dermatomyositis, symptomatic sarcoidosis, severe acute and chronic allergic, and inflammatory diseases; INOmax, a vasodilator to enhance oxygenation and reduce the need for extracorporeal membrane oxygenation; Therakos photopheresis, an immunotherapy treatment platform; Amitiza for constipation; and StrataGraft for the treatment of adults with deep partial-thickness burns. The company is also developing Terlipressin for the treatment of hepatorenal syndrome; and SLN 501 is a ribonucleic acid silencing therap. In addition, it provides specialty generic drugs and active pharmaceutical ingredients. The company markets its branded products to physicians, respiratory therapists, pharmacists, pharmacy buyers, hospital procurement departments, ambulatory surgical centers, and specialty pharmacies. Mallinckrodt plc has collaboration with Silence Therapeutics plc to develop and commercialize ribonucleic acid interference drug targets. The company was founded in 1867 and is based in Dublin, Ireland. On October 12, 2020, Mallinckrodt plc, along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware.