XOMA Royalty (NASDAQ:XOMA) and Galapagos (NASDAQ:GLPG) Critical Contrast

Galapagos (NASDAQ:GLPG) and XOMA Royalty (NASDAQ:XOMA) are both small-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.

Volatility and Risk

Galapagos has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500. Comparatively, XOMA Royalty has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Valuation and Earnings

This table compares Galapagos and XOMA Royalty”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Galapagos	$1.26 billion	1.56	$363.05 million	($1.57)	-18.96
XOMA Royalty	$52.15 million	7.56	$31.71 million	$1.46	22.66

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

Profitability

This table compares Galapagos and XOMA Royalty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Galapagos	N/A	N/A	N/A
XOMA Royalty	45.75%	10.32%	3.49%

Insider & Institutional Ownership

32.5% of Galapagos shares are owned by institutional investors. Comparatively, 95.9% of XOMA Royalty shares are owned by institutional investors. 2.9% of Galapagos shares are owned by company insiders. Comparatively, 9.1% of XOMA Royalty shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Galapagos and XOMA Royalty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Galapagos	1	5	0	1	2.14
XOMA Royalty	1	2	3	0	2.33

Galapagos presently has a consensus target price of $36.50, suggesting a potential upside of 22.65%. XOMA Royalty has a consensus target price of $61.60, suggesting a potential upside of 86.22%. Given XOMA Royalty’s stronger consensus rating and higher possible upside, analysts clearly believe XOMA Royalty is more favorable than Galapagos.

Summary

XOMA Royalty beats Galapagos on 12 of the 15 factors compared between the two stocks.

About Galapagos

Galapagos NV, a biotechnology company, develops medicines focusing on oncology and immunology primarily in the United States and Europe. The company's pipeline products comprise GLPG3667 that has completed phase 1b trial; GLPG5101, a CD19 CAR-T product candidate manufactured at point-of-care, currently in Phase1/2 trial in relapsed/refractory non-hodgkin lymphoma; GLPG5201, a CD19 CAR-T product candidates manufactured at point-of-care, currently in phase 1/2 trial in replapsed/refractory chronic lymphocytic leukemia; and GLPG5301, a BCMA CAR-T product candidate manufactured at point-of-care, currently in phase 1/2 in relapsed/refractory multiple myeloma. The company has collaboration agreements with Gilead Sciences, Inc.; and AbbVie S.à r.l. Galapagos NV was incorporated in 1999 and is headquartered in Mechelen, Belgium.

About XOMA Royalty

XOMA Corporation operates as a biotech royalty aggregator in the United States and the Asia Pacific. It has a portfolio of economic rights to future potential milestone and royalty payments associated with partnered commercial and pre-commercial therapeutic candidates. The company also focuses on early to mid-stage clinical assets primarily in Phase 1 and 2 with commercial sales potential that are licensed to partners; and acquires milestone and royalty revenue streams on late-stage clinical or commercial assets. It has a portfolio with various assets. XOMA Corporation was incorporated in 1981 and is headquartered in Emeryville, California.