Achaogen (NASDAQ: AKAO) and Xencor (NASDAQ:XNCR) are both small-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Profitability

This table compares Achaogen and Xencor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Achaogen -593.61% -80.44% -51.17%
Xencor -148.29% -15.26% -11.11%

Volatility & Risk

Achaogen has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, Xencor has a beta of 2.09, suggesting that its share price is 109% more volatile than the S&P 500.

Institutional and Insider Ownership

85.8% of Achaogen shares are owned by institutional investors. Comparatively, 77.6% of Xencor shares are owned by institutional investors. 8.4% of Achaogen shares are owned by insiders. Comparatively, 4.1% of Xencor shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Achaogen and Xencor, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Achaogen 0 1 8 0 2.89
Xencor 0 2 4 0 2.67

Achaogen presently has a consensus target price of $25.63, suggesting a potential upside of 140.84%. Xencor has a consensus target price of $30.80, suggesting a potential upside of 46.46%. Given Achaogen’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Achaogen is more favorable than Xencor.

Earnings & Valuation

This table compares Achaogen and Xencor’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Achaogen $41.77 million 10.80 -$71.22 million ($3.60) -2.96
Xencor $87.52 million 11.28 $23.62 million ($1.00) -21.03

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

Summary

Xencor beats Achaogen on 8 of the 13 factors compared between the two stocks.

About Achaogen

Achaogen, Inc. is a late-stage biopharmaceutical company. The Company is engaged in the discovery, development and commercialization of antibacterial treatments against multi-drug resistant (MDR) gram-negative infections. The Company is involved in researching and developing plazomicin, its lead product candidate, for the treatment of serious bacterial infections, including complicated urinary tract infection (cUTI), blood stream infections and other infections due to MDR Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae (CRE). Plazomicin is an intravenous aminoglycoside antibiotic. The Company has developed plazomicin by chemically modifying sisomicin, a naturally occurring aminoglycoside, in order to overcome common aminoglycoside resistance mechanisms. The Company has a portfolio of small molecule and antibody programs. The Company’s Early Development programs include C-Scape and LpxC.

About Xencor

Xencor, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on discovering and developing engineered monoclonal antibodies to treat severe and life threatening diseases. It has developed two clinical-stage product candidates, using its Immune Inhibitor Fc platform: XmAb5871, which is in two Phase II trials and is being developed for autoimmune disease, and XmAb7195, which is in a Phase I trial and is being developed for asthma and allergic diseases. It is also developing a pipeline of bispecific antibody candidates using its heterodimer Fc bispecific technology: XmAb14045, which is in a Phase I trial for the treatment of acute myeloid leukemia (AML); XmAb13676, which is in a Phase I trial for the treatment of B-cell malignancies; XmAb18087, which is in preclinical development for the treatment of neuroendocrine tumors, and XmAb20717, which is in preclinical development for the treatment of various cancers and is its dual checkpoint inhibitor.

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