Critical Analysis: Galecto (NASDAQ:GLTO) vs. ObsEva (NASDAQ:OBSV)

ObsEva (NASDAQ:OBSV) and Galecto (NASDAQ:GLTO) are both small-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Profitability

This table compares ObsEva and Galecto’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ObsEva	N/A	-416.36%	-92.01%
Galecto	N/A	-76.96%	-66.59%

Earnings and Valuation

This table compares ObsEva and Galecto”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ObsEva	$20.11 million	0.00	-$58.38 million	($0.92)	N/A
Galecto	N/A	N/A	-$38.35 million	($19.14)	-0.29

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

Analyst Ratings

This is a summary of current ratings and recommmendations for ObsEva and Galecto, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ObsEva	0	0	0	0	0.00
Galecto	0	0	1	0	3.00

Galecto has a consensus target price of $10.00, suggesting a potential upside of 81.82%. Given Galecto’s stronger consensus rating and higher probable upside, analysts plainly believe Galecto is more favorable than ObsEva.

Insider & Institutional Ownership

17.5% of ObsEva shares are owned by institutional investors. Comparatively, 14.2% of Galecto shares are owned by institutional investors. 14.4% of ObsEva shares are owned by insiders. Comparatively, 11.9% of Galecto shares are owned by 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.

Risk and Volatility

ObsEva has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Galecto has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Summary

Galecto beats ObsEva on 7 of the 12 factors compared between the two stocks.

About ObsEva

ObsEva SA is a clinical-stage biopharmaceutical company, which engages in the research and development of therapeutic treatments for women’s reproductive health and pregnancy. It offers biopharmaceutical drugs addressing conditions compromising pregnancy from conception to birth. The company was founded by Ernest Loumaye and André Chollet on November 14, 2012 and is headquartered in Geneva, Switzerland.

About Galecto

Galecto, Inc., a clinical-stage biotechnology company, develops molecules for the treatment of fibrosis, cancer, inflammation, and other related diseases. The company's lead product candidate is GB2064, which is in Phase IIa for the treatment of myelofibrosis. It also develops GB2064, a selective oral small molecule inhibitor of LOXL2 that is in Phase 2a clinical trial for the treatment of fibrotic diseases, including cancer and myelofibrosis; and GB1211, a selective oral galectin-3 inhibitor that is in Phase IIa for the treatment of cancer, as well as in Phase Ib/IIa for fibrosis. Galecto, Inc. was founded in 2011 and is headquartered in Copenhagen, Denmark.