XBiotech (NASDAQ: XBIT) and Lexicon Pharmaceuticals (NASDAQ:LXRX) are both small-cap medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Earnings & Valuation

This table compares XBiotech and Lexicon Pharmaceuticals’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
XBiotech N/A N/A -$47.92 million ($1.63) -2.77
Lexicon Pharmaceuticals $81.10 million 16.12 -$140.12 million ($1.32) -9.38

XBiotech has higher revenue, but lower earnings than Lexicon Pharmaceuticals. Lexicon Pharmaceuticals is trading at a lower price-to-earnings ratio than XBiotech, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

10.6% of XBiotech shares are held by institutional investors. 35.7% of XBiotech shares are held by insiders. Comparatively, 5.8% of Lexicon Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for XBiotech and Lexicon Pharmaceuticals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
XBiotech 0 1 1 0 2.50
Lexicon Pharmaceuticals 0 1 3 0 2.75

XBiotech presently has a consensus price target of $13.00, indicating a potential upside of 187.61%. Lexicon Pharmaceuticals has a consensus price target of $28.75, indicating a potential upside of 132.14%. Given XBiotech’s higher possible upside, analysts plainly believe XBiotech is more favorable than Lexicon Pharmaceuticals.

Volatility and Risk

XBiotech has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Lexicon Pharmaceuticals has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500.

Profitability

This table compares XBiotech and Lexicon Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
XBiotech N/A -67.91% -62.52%
Lexicon Pharmaceuticals -170.63% -94.87% -31.59%

Summary

XBiotech beats Lexicon Pharmaceuticals on 7 of the 12 factors compared between the two stocks.

About XBiotech

XBiotech Inc. is a clinical-stage biopharmaceutical company. The Company is engaged in discovering and developing True Human monoclonal antibodies for treating a range of different diseases. It focuses on its lead product candidate, Xilonix (MABp1), which is derived from a natural human immune response. The Company has also developed a True Human monoclonal antibody discovery platform and manufacturing system. Xilonix is a therapeutic antibody, which specifically neutralizes interleukin-1 alpha (IL-1a). Its pipeline includes various human antibodies for treating diseases, such as cancer, vascular disease, inflammatory skin disease and diabetes. The Company has completed a Phase III study in Europe for the treatment of symptomatic colorectal cancer. It also investigated its lead product candidate in clinical trials for other inflammatory conditions, including vascular disease, type II diabetes, acne, psoriasis, pyoderma gangrenosum (PG) and hidradenitis suppurativa (HS).

About Lexicon Pharmaceuticals

Lexicon Pharmaceuticals, Inc. is a biopharmaceutical company. The Company focuses on the development and commercialization of breakthrough treatments for human disease. Its drug programs include XERMELO (telotristat ethyl), sotagliflozin, LX2761 and LX9211. It also has a number of additional compounds into various stages of clinical and preclinical development. XERMELO is an orally-delivered small molecule compound approved by the Food and Drug Administration (FDA) for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog (SSA) therapy in adults inadequately controlled by SSA therapy. It is developing sotagliflozin, an orally-delivered small molecule drug candidate, as a treatment for type 1 and type 2 diabetes mellitus. LX2761 is an orally-delivered small molecule compound that it is developing for the treatment of diabetes. LX9211 is an orally-delivered small molecule compound that the Company is developing for the treatment of neuropathic pain.

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