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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Versartis and ImmunoGen, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Versartis 0 8 1 0 2.11
ImmunoGen 0 2 6 0 2.75

Versartis presently has a consensus target price of $5.13, suggesting a potential upside of 260.92%. ImmunoGen has a consensus target price of $13.60, suggesting a potential upside of 46.87%. Given Versartis’ higher probable upside, analysts clearly believe Versartis is more favorable than ImmunoGen.

Profitability

This table compares Versartis and ImmunoGen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Versartis N/A -54.03% -37.80%
ImmunoGen -194.78% N/A -43.36%

Earnings & Valuation

This table compares Versartis and ImmunoGen’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Versartis $40,000.00 1,286.52 -$84.97 million ($2.41) -0.59
ImmunoGen $115.45 million 11.95 -$96.01 million ($0.75) -12.35

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

Institutional & Insider Ownership

38.6% of Versartis shares are held by institutional investors. Comparatively, 83.8% of ImmunoGen shares are held by institutional investors. 10.9% of Versartis shares are held by insiders. Comparatively, 4.4% of ImmunoGen shares are held 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.

Risk & Volatility

Versartis has a beta of 1.91, meaning that its share price is 91% more volatile than the S&P 500. Comparatively, ImmunoGen has a beta of 1.95, meaning that its share price is 95% more volatile than the S&P 500.

About Versartis

Versartis, Inc. operates as an endocrine-focused biopharmaceutical company in the United States. It is developing somavaratan, a long-acting recombinant human growth hormone for the treatment of growth hormone deficiency. The company was founded in 2008 and is headquartered in Menlo Park, California.

About ImmunoGen

ImmunoGen, Inc., a clinical-stage biotechnology company, focuses on developing antibody-drug conjugate (ADC) therapies to treat cancer. Its product candidates include mirvetuximab soravtansine, an ADC targeting folate-receptor alpha, which is in Phase III clinical trial for the treatment of platinum-resistant ovarian cancer; IMGN779 that is in Phase I clinical trial for the treatment of acute myeloid leukemia (AML); and IMGN632, a CD123-targeting ADC that is in Phase I clinical trial for treating AML and blastic plasmacytoid dendritic cell neoplasm, as well as coltuximab ravtansine, a CD19-targeting ADC, which is in Phase II trial for DLBCL. ImmunoGen, Inc. has collaborations with Roche; Bayer HealthCare AG; Sanofi; Biotest AG; Novartis Institutes for BioMedical Research, Inc.; Eli Lilly and Company; Amgen; CytomX Therapeutics, Inc.; Takeda Pharmaceutical Company Limited; Jazz Pharmaceuticals plc; and Debiopharm International SA. ImmunoGen, Inc. was founded in 1981 and is headquartered in Waltham, Massachusetts.

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