Analyzing Diffusion Pharmaceuticals (NASDAQ:DFFN) and Merus (NASDAQ:MRUS)

Diffusion Pharmaceuticals (NASDAQ:DFFN) and Merus (NASDAQ:MRUS) are both small-cap medical companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, profitability, analyst recommendations, valuation and risk.

Earnings and Valuation

This table compares Diffusion Pharmaceuticals and Merus’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diffusion Pharmaceuticals N/A N/A -$11.80 million ($1.76) -0.17
Merus $31.13 million 11.93 -$55.15 million ($2.33) -5.50

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

Profitability

This table compares Diffusion Pharmaceuticals and Merus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diffusion Pharmaceuticals N/A -75.17% -62.74%
Merus -177.15% -55.90% -23.43%

Institutional and Insider Ownership

10.4% of Diffusion Pharmaceuticals shares are owned by institutional investors. Comparatively, 76.3% of Merus shares are owned by institutional investors. 5.6% of Diffusion Pharmaceuticals shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Diffusion Pharmaceuticals has a beta of -0.15, meaning that its share price is 115% less volatile than the S&P 500. Comparatively, Merus has a beta of 0.08, meaning that its share price is 92% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Diffusion Pharmaceuticals and Merus, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diffusion Pharmaceuticals 0 0 1 0 3.00
Merus 0 0 5 0 3.00

Diffusion Pharmaceuticals presently has a consensus price target of $3.50, indicating a potential upside of 1,105.23%. Merus has a consensus price target of $25.60, indicating a potential upside of 99.84%. Given Diffusion Pharmaceuticals’ higher probable upside, research analysts clearly believe Diffusion Pharmaceuticals is more favorable than Merus.

About Diffusion Pharmaceuticals

Diffusion Pharmaceuticals Inc., a clinical stage biotechnology company, develops treatments for life-threatening medical conditions. Its lead product candidate is transcrocetinate sodium, which is in Phase III trials for the treatment of glioblastoma multiforme (GBM); Phase II clinical trials for the treatment of pancreatic cancer and metastatic brain cancer; and Phase II trial for the treatment of acute stroke. The company is also developing RES-529, a novel PI3K/Akt/mTOR pathway inhibitor, which has completed two Phase I clinical trials for the treatment of age-related macular degeneration; and is in pre-clinical development stage for the treatment of oncology primarily GBM. Diffusion Pharmaceuticals Inc. was founded in 2001 and is headquartered in Charlottesville, Virginia.

About Merus

Merus N.V., a clinical-stage immuno-oncology company, engages in developing bispecific antibody therapeutics. Its bispecific antibody candidate pipeline includes MCLA-128, which is in a Phase II clinical trial for the treatment of patients with metastatic breast cancer; and Phase I/II study for treating gastric, ovarian, endometrial, and non-small cell lung cancers. The company is also developing MCLA-117 that is in Phase I clinical trial for the treatment of patients with acute myeloid leukemia; and MCLA-158, which is in a Phase I clinical trial for treating metastatic colorectal cancer. In addition, its preclinical development stage bispecific antibody candidates include MCLA-145, which is being developed in collaboration with Incyte Corporation; and other preclinical candidates in various stages of development. Merus N.V. has collaboration with the Integral Molecular for discovering MAbs against structurally complex proteins; and Lipoparticles, virus-like particles displaying high concentrations of membrane proteins. The company was founded in 2003 and is headquartered in Utrecht, the Netherlands.

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