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Critical Contrast: Johnson & Johnson (NYSE:JNJ) vs. Nektar Therapeutics (NASDAQ:NKTR)

Johnson & Johnson (NYSE:JNJ) and Nektar Therapeutics (NASDAQ:NKTR) are both medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Johnson & Johnson and Nektar Therapeutics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Johnson & Johnson 0 3 10 0 2.77
Nektar Therapeutics 1 6 7 0 2.43

Johnson & Johnson presently has a consensus target price of $166.69, suggesting a potential upside of 3.99%. Nektar Therapeutics has a consensus target price of $30.67, suggesting a potential upside of 67.76%. Given Nektar Therapeutics’ higher probable upside, analysts clearly believe Nektar Therapeutics is more favorable than Johnson & Johnson.

Earnings and Valuation

This table compares Johnson & Johnson and Nektar Therapeutics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Johnson & Johnson $82.06 billion 5.13 $15.12 billion $8.68 18.41
Nektar Therapeutics $114.62 million 28.61 -$440.67 million ($2.52) -7.25

Johnson & Johnson has higher revenue and earnings than Nektar Therapeutics. Nektar Therapeutics is trading at a lower price-to-earnings ratio than Johnson & Johnson, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Johnson & Johnson has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Nektar Therapeutics has a beta of 1.74, meaning that its stock price is 74% more volatile than the S&P 500.

Insider & Institutional Ownership

61.3% of Johnson & Johnson shares are owned by institutional investors. Comparatively, 85.3% of Nektar Therapeutics shares are owned by institutional investors. 0.3% of Johnson & Johnson shares are owned by company insiders. Comparatively, 3.0% of Nektar Therapeutics shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Johnson & Johnson and Nektar Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Johnson & Johnson 21.01% 34.64% 13.40%
Nektar Therapeutics -269.05% -30.74% -22.63%

Summary

Johnson & Johnson beats Nektar Therapeutics on 9 of the 14 factors compared between the two stocks.

About Johnson & Johnson

Johnson & Johnson researches and develops, manufactures, and sells various products in the health care field worldwide. It operates in three segments: Consumer, Pharmaceutical, and Medical Devices. The Consumer segment offers baby care products under the JOHNSON’S brand; oral care products under the LISTERINE brand; beauty products under the AVEENO, CLEAN & CLEAR, DR. CI:LABO NEUTROGENA, and OGX brands; over-the-counter medicines, including acetaminophen products under the TYLENOL brand; cold, flu, and allergy products under the SUDAFED brand; allergy products under the BENADRYL and ZYRTEC brands; ibuprofen products under the MOTRIN IB brand; and acid reflux products under the PEPCID brand. This segment also provides women’s health products, such as sanitary pads and tampons under the STAYFREE, CAREFREE, and o.b. brands; wound care products comprising adhesive bandages under the BAND-AID brand; and first aid products under the NEOSPORIN brand. The Pharmaceutical segment offers products in various therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, pulmonary hypertension, and cardiovascular and metabolic diseases. The Medical Devices segment provides orthopedic products; general surgery, biosurgical, endomechanical, and energy products; electrophysiology products to treat cardiovascular diseases; and vision care products, such as disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery. The company markets its products to general public, and retail outlets and distributors, as well as distributes directly to wholesalers, hospitals, and health care professionals for prescription use. Johnson & Johnson was founded in 1886 and is based in New Brunswick, New Jersey.

About Nektar Therapeutics

Nektar Therapeutics, a biopharmaceutical company, researches and develops drug candidates for cancer and auto-immune disease in the United States. The company develops NKTR-181, a novel mu-opioid analgesic drug, which is in Phase III clinical trial for chronic low back pain; ONZEALD, a topoisomerase I inhibitor that is in Phase III clinical trial for advanced metastatic breast cancer in patients with brain metastases; and Bempegaldesleukin, a CD122-preferential interleukin-2 (IL-2) pathway agonist, which is in Phase I is designed to provide rapid activation and proliferation of cancer-killing CD8+ effector T cells and NK cells. It also develops NKTR-358, cytokine Treg stimulant, which is in Phase I to treat autoimmune diseases; NKTR-262, a toll-like receptor agonist that is in Phase I for oncology; and NKTR-255, which is in phase I for immuno-oncology. In addition, the is developing ADYNOVATE and ADYNOVI for hemophilia A; MOVANTIK for opioid-induced constipation in adult patients with chronic non-cancer pain; CIMZIA for crohn’s disease, rheumatoid arthritis, and psoriasis/ankylosing spondylitis; and MIRCERA for anemia associated with chronic kidney disease. Further, it is developing Macugen for age-related macular degeneration; Somavert for acromegaly; Neulasta for neutropenia; Dapirolizumab Pegol for systemic lupus erythematosus; PEGPH20 for pancreatic, non-small cell lung cancer, and other tumor types; and longer-acting blood clotting proteins for hemophilia. The company has collaboration agreement with Takeda Pharmaceutical Company Ltd.; AstraZeneca AB; UCB Pharma S.A.; F. Hoffmann-La Roche Ltd; Bausch Health Companies Inc.; Pfizer Inc.; Amgen Inc.; UCB Pharma (Biogen); Halozyme Therapeutics, Inc.; Bristol-Myers Squibb Company; Baxalta Incorporated; and Eli Lilly and Company, as well as with Merck KGaA. Nektar Therapeutics was incorporated in 1990 and is headquartered in San Francisco, California.

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