FibroGen (NASDAQ:FGEN – Get Free Report) and Verastem (NASDAQ:VSTM – Get Free Report) are both small-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.
Analyst Recommendations
This is a summary of recent recommendations and price targets for FibroGen and Verastem, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FibroGen | 0 | 1 | 0 | 0 | 2.00 |
| Verastem | 0 | 0 | 8 | 0 | 3.00 |
Verastem has a consensus price target of $14.57, indicating a potential upside of 276.52%. Given Verastem’s stronger consensus rating and higher possible upside, analysts plainly believe Verastem is more favorable than FibroGen.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| FibroGen | $173.82 million | 0.18 | -$284.23 million | ($1.71) | -0.18 |
| Verastem | $2.60 million | 59.90 | -$87.37 million | ($3.34) | -1.16 |
Verastem has lower revenue, but higher earnings than FibroGen. Verastem is trading at a lower price-to-earnings ratio than FibroGen, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
FibroGen has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500. Comparatively, Verastem has a beta of 0.14, suggesting that its stock price is 86% less volatile than the S&P 500.
Profitability
This table compares FibroGen and Verastem’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FibroGen | -96.84% | N/A | -40.37% |
| Verastem | N/A | -194.05% | -64.48% |
Institutional and Insider Ownership
72.7% of FibroGen shares are owned by institutional investors. Comparatively, 88.4% of Verastem shares are owned by institutional investors. 2.0% of FibroGen shares are owned by company insiders. Comparatively, 2.2% of Verastem shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Summary
Verastem beats FibroGen on 8 of the 14 factors compared between the two stocks.
About FibroGen
FibroGen, Inc., a biopharmaceutical company, discovers, develops, and commercializes therapeutics to treat serious unmet medical needs. Its lead product candidates are Pamrevlumab, a human monoclonal antibody targeting connective tissue growth factor that is in Phase III clinical development for the treatment of locally advanced pancreatic cancer; and Roxadustat, an oral small molecule inhibitor of hypoxia-inducible factor prolyl hydroxylase activity, which has completed Phase III clinical development for the treatment of anemia in chronic kidney disease in China, Europe, Japan, and other countries, as well as in Phase III clinical development for anemia related with myelodysplastic syndromes. The company has collaboration agreements with Astellas Pharma Inc. and AstraZeneca AB. FibroGen, Inc. was incorporated in 1993 and is headquartered in San Francisco, California.
About Verastem
Verastem, Inc., a development-stage biopharmaceutical company, focuses on developing and commercializing drugs for the treatment of cancer in the United States. Its product candidates are Avutometinib, an orally available small molecule RAF/MEK clamp that inhibits the ras sarcoma RAF/MEK, ERK mitogen activated pathway kinase pathway which is involved in cell proliferation, migration, transformation, and survival of tumor cells; and Defactinib, an oral small molecule inhibitor of FAK and proline-rich tyrosine kinase for various solid tumors. The company is involved in clinical studies, including RAMP 301, a randomized global confirmatory trial to evaluate the combination of Avutometinib and Defactinib for the treatment of patients with recurrent low-grade serous ovarian cancer; RAMP 201, an adaptive two-part multicenter, parallel cohort, randomized open label trial to evaluate the efficacy and safety of Avutometinib and in combination with Defactinib; and FRAME, an investigation of Avutometinib and Defactinib in patients with KRAS mutant cancers and subsequent analyses; and RAMP 204 and 205. It has license agreements with Chugai Pharmaceutical Co., Ltd. for the development, commercialization, and manufacture of products containing Avutometinib; and Pfizer Inc. to research, develop, manufacture, and commercialize products containing Pfizer's inhibitors of FAK for therapeutic, diagnostic, and prophylactic uses in humans. In addition, it has a clinical collaboration agreement with Amgen, Inc. to evaluate the combination of Avutometinib with Amgen's KRAS-G12C inhibitor LUMAKRAS which in Phase 1/2 trial entitled RAMP 203; and a discovery and development collaboration with GenFleet Therapeutics to advance new programs targeting RAS pathway-driven cancers. Verastem, Inc. was incorporated in 2010 and is headquartered in Needham, Massachusetts.
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