Erasca (NASDAQ:ERAS) and Merck KGaA (OTCMKTS:MKGAF) Head-To-Head Contrast

Merck KGaA (OTCMKTS:MKGAF) and Erasca (NASDAQ:ERAS) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Merck KGaA and Erasca, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merck KGaA	0	0	0	1	4.00
Erasca	0	0	6	0	3.00

Erasca has a consensus target price of $4.83, indicating a potential upside of 316.67%. Given Erasca’s higher probable upside, analysts clearly believe Erasca is more favorable than Merck KGaA.

Volatility and Risk

Merck KGaA has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Erasca has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Institutional and Insider Ownership

0.1% of Merck KGaA shares are held by institutional investors. Comparatively, 67.8% of Erasca shares are held by institutional investors. 21.5% of Erasca shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Merck KGaA and Erasca’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merck KGaA	12.60%	10.17%	5.74%
Erasca	N/A	-42.26%	-34.97%

Earnings and Valuation

This table compares Merck KGaA and Erasca”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merck KGaA	$22.72 billion	0.71	$3.06 billion	$6.81	18.42
Erasca	N/A	N/A	-$125.04 million	($0.74)	-1.57

Merck KGaA has higher revenue and earnings than Erasca. Erasca is trading at a lower price-to-earnings ratio than Merck KGaA, indicating that it is currently the more affordable of the two stocks.

Summary

Merck KGaA beats Erasca on 9 of the 14 factors compared between the two stocks.

About Merck KGaA

Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company's Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies. Its Healthcare segment discovers, develops, manufacturers, and markets prescription drugs and biopharmaceuticals for the treatment of oncology, neurology and immunology, fertility, endocrinology, as well as cardiovascular, diabetes, thyroid disorders, and multiple sclerosis; general medicines; and injection device and disease monitoring software. The Electronics segment supplies materials for the semiconductor and display industries and surface design, such as delivery systems and services, as well as surface solutions, including cosmetics, effect pigments, and functional solutions. In addition, it has in-licensing agreement with Debiopharm International SA for developing and commercializing drug candidates for the treatment of head and neck cancer; Jiangsu Hengrui Pharmaceuticals Co. Ltd. for developing, manufacturing, and commercializing drug candidates for the treatment of metastatic colorectal cancer; and Abbisko Therapeutics Co. Ltd. for developing and commercializing of drug candidates for the treatment of tenosynovial giant cell tumor, as well as license and collaboration agreement with Merck KGaA to discover two targeted protein degraders against critical oncogenic proteins. The company was founded in 1668 and is headquartered in Darmstadt, Germany. Merck KGaA operates as a subsidiary of E. Merck KGaA.

About Erasca

Erasca, Inc., a clinical-stage precision oncology company, focuses on discovering, developing, and commercializing therapies for patients with RAS/MAPK pathway-driven cancers. The company’s lead product is naporafenib which is in phase 1b trial for patients with RAS Q16X solid tumors and plans to initiate a pivotal Phase 3 trial for patients with NRASm melanoma. It also develops ERAS-007, an oral inhibitor of ERK1/2 for the treatment of non-small cell lung and colorectal cancer, and advanced gastrointestinal malignancies; and ERAS-601, an oral SHP2 inhibitor for patients with advanced or metastatic solid tumors. In addition, it is developing ERAS-801, a central nervous system-penetrant EGFR inhibitor which is in phase 1 clinical trials for the treatment of patients with recurrent glioblastoma multiforme. The company entered into license agreement with Novartis to develop, manufacture, use, and commercialize naporafenib; Katmai Pharmaceuticals, Inc. to develop, manufacture, use, and commercialize ERAS-801 and certain other related compounds; and NiKang Therapeutics, Inc. to develop and commercialize ERAS-601 and certain other related compounds. Erasca, Inc. was incorporated in 2018 and is headquartered in San Diego, California.