Arena Pharmaceuticals (NASDAQ: ARNA) and Palatin Technologies (NYSE:PTN) are both small-cap medical companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

47.7% of Arena Pharmaceuticals shares are held by institutional investors. 1.9% of Arena Pharmaceuticals shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Arena Pharmaceuticals and Palatin Technologies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arena Pharmaceuticals $117.73 million 9.32 $16.71 million ($0.57) -49.09
Palatin Technologies $44.72 million 2.98 -$10.54 million N/A N/A

Arena Pharmaceuticals has higher revenue and earnings than Palatin Technologies.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Arena Pharmaceuticals and Palatin Technologies, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arena Pharmaceuticals 0 2 5 0 2.71
Palatin Technologies 0 0 2 0 3.00

Arena Pharmaceuticals currently has a consensus target price of $38.83, indicating a potential upside of 38.79%. Palatin Technologies has a consensus target price of $4.00, indicating a potential upside of 438.00%. Given Palatin Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Palatin Technologies is more favorable than Arena Pharmaceuticals.

Profitability

This table compares Arena Pharmaceuticals and Palatin Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arena Pharmaceuticals -16.27% -49.87% -10.82%
Palatin Technologies 39.28% N/A 90.43%

Summary

Arena Pharmaceuticals beats Palatin Technologies on 6 of the 11 factors compared between the two stocks.

Arena Pharmaceuticals Company Profile

Arena Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on developing small molecule drugs across a range of therapeutic areas. The Company has three primary investigational clinical programs: etrasimod (APD334) in Phase II evaluation for ulcerative colitis, APD371 entering Phase II evaluation for the treatment of pain associated with Crohn’s disease, and ralinepag (APD811) in Phase II evaluation for pulmonary arterial hypertension (PAH). The Company’s drug, Lorcaserin, is approved for marketing in the United States and South Korea for the indication of weight management. The Company’s drug candidates in clinical development include APD334 for autoimmune diseases, ralinepag for vascular diseases and APD371 for pain. The Company’s programs under collaboration include nelotanserin for dementia-associated psychosis, temanogrel for thrombotic diseases, and an undisclosed orphan GPCR for central nervous system (CNS) indication(s).

Palatin Technologies Company Profile

Palatin Technologies, Inc. is a biopharmaceutical company. The Company is engaged in developing targeted, receptor-specific peptide therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Its programs are based on molecules that modulate the activity of the melanocortin and natriuretic peptide receptor systems. The Company’s primary product in clinical development is bremelanotide for the treatment of premenopausal women with hypoactive sexual desire disorder (HSDD), which is a type of female sexual dysfunction (FSD) defined as low desire with associated distress. Its other drug development programs include Melanocortin receptor-4 (MC4r), PL-3994 and Melanocortin receptor-1 (MC1r). MC4r is a compound used for treatment of obesity and diabetes. PL-3994 is a subcutaneously injected guanylate-cyclase type A (GC-A) receptor agonist. MC1r agonist peptides are used for treatment of inflammatory and dermatologic disease indications.

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