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

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

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%

Analyst Recommendations

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

	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 currently has a consensus target price of $26.92, suggesting a potential upside of 281.26%. Madrigal Pharmaceuticals has a consensus target price of $347.33, suggesting a potential downside of 2.12%. Given Terns Pharmaceuticals’ stronger consensus rating and higher possible upside, equities analysts clearly believe Terns Pharmaceuticals is more favorable than Madrigal Pharmaceuticals.

Institutional & Insider 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 large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terns Pharmaceuticals	$1.00 million	496.57	-$90.21 million	($1.32)	-5.35
Madrigal Pharmaceuticals	N/A	N/A	-$373.63 million	($25.08)	-14.15

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.

Summary

Terns Pharmaceuticals beats Madrigal Pharmaceuticals on 9 of the 12 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.