Critical Analysis: Allakos (NASDAQ:ALLK) and Liminal BioSciences (NASDAQ:LMNL)

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

Profitability

This table compares Allakos and Liminal BioSciences’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allakos N/A -50.04% -43.27%
Liminal BioSciences 3,107.45% -514.74% -45.40%

Valuation and Earnings

This table compares Allakos and Liminal BioSciences’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allakos N/A N/A -$269.86 million ($5.00) -0.75
Liminal BioSciences $510,000.00 46.44 $10.28 million $0.53 1.44

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

Risk and Volatility

Allakos has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Liminal BioSciences has a beta of 1.58, meaning that its share price is 58% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Allakos and Liminal BioSciences, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allakos 1 7 2 0 2.10
Liminal BioSciences 0 2 0 0 2.00

Allakos currently has a consensus target price of $68.42, indicating a potential upside of 1,714.90%. Liminal BioSciences has a consensus target price of $7.75, indicating a potential upside of 915.73%. Given Allakos’ stronger consensus rating and higher probable upside, research analysts plainly believe Allakos is more favorable than Liminal BioSciences.

Institutional and Insider Ownership

61.2% of Allakos shares are held by institutional investors. Comparatively, 0.8% of Liminal BioSciences shares are held by institutional investors. 34.5% of Allakos shares are held by company 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.

Summary

Allakos beats Liminal BioSciences on 7 of the 13 factors compared between the two stocks.

Allakos Company Profile (Get Rating)

Allakos Inc., a clinical stage biopharmaceutical company, develops therapeutics that target immunomodulatory receptors present on immune effector cells in allergy, inflammatory, and proliferative diseases. The company's lead monoclonal antibody is lirentelimab (AK002), which is in a Phase III study for the treatment of eosinophilic gastritis and/or eosinophilic duodenitis; a Phase II/III study for eosinophilic esophagitis; and a Phase II clinical study to atopic dermatitis and chronic spontaneous urticaria. It is also developing lirentelimab (AK002) for the treatment of mast cell gastrointestinal disease, chronic urticaria, severe allergic conjunctivitis, and indolent systemic mastocytosis; and AK006 to treat allergic and inflammatory diseases. The company was incorporated in 2012 and is headquartered in Redwood City, California.

Liminal BioSciences Company Profile (Get Rating)

Liminal BioSciences Inc., a clinical-stage biopharmaceutical company, focuses on the development of novel small molecule drug therapeutics for inflammatory, fibrotic, and metabolic diseases in Canada and the United Kingdom. The company's lead product candidate is fezagepras (PBI-4050), which has been completed Phase I clinical trial for the treatment of idiopathic pulmonary, liver, cardiac, or skin fibrosis with fezagepras or related derivatives and respiratory diseases. It is also developing antagonist candidate programs, including G-protein coupled receptor 84 and Oxo-eicosanoid receptor 1, which are in preclinical stage. The company was formerly known as Prometic Life Sciences Inc. and changed its name to Liminal BioSciences Inc. in October 2019. Liminal BioSciences Inc. was incorporated in 1994 and is headquartered in Laval, Canada.

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