Analyzing Emergent Biosolutions (NYSE:EBS) and Sutro Biopharma (NASDAQ:STRO)

Sutro Biopharma (NASDAQ:STRO) and Emergent Biosolutions (NYSE:EBS) are both small-cap healthcare companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.

Earnings and Valuation

This table compares Sutro Biopharma and Emergent Biosolutions”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sutro Biopharma	$102.48 million	2.34	-$191.09 million	($11.97)	-1.21
Emergent Biosolutions	$742.90 million	0.48	$52.60 million	($3.55)	-1.95

Emergent Biosolutions has higher revenue and earnings than Sutro Biopharma. Emergent Biosolutions is trading at a lower price-to-earnings ratio than Sutro Biopharma, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and target prices for Sutro Biopharma and Emergent Biosolutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sutro Biopharma	1	0	10	2	3.00
Emergent Biosolutions	2	1	3	0	2.17

Sutro Biopharma currently has a consensus price target of $49.50, indicating a potential upside of 242.56%. Emergent Biosolutions has a consensus price target of $10.00, indicating a potential upside of 44.24%. Given Sutro Biopharma’s stronger consensus rating and higher possible upside, research analysts clearly believe Sutro Biopharma is more favorable than Emergent Biosolutions.

Profitability

This table compares Sutro Biopharma and Emergent Biosolutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sutro Biopharma	-395.25%	N/A	-88.12%
Emergent Biosolutions	-22.95%	16.35%	6.17%

Insider and Institutional Ownership

97.0% of Sutro Biopharma shares are owned by institutional investors. Comparatively, 78.4% of Emergent Biosolutions shares are owned by institutional investors. 1.8% of Sutro Biopharma shares are owned by insiders. Comparatively, 6.0% of Emergent Biosolutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Sutro Biopharma has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500. Comparatively, Emergent Biosolutions has a beta of 2.28, suggesting that its share price is 128% more volatile than the S&P 500.

Summary

Emergent Biosolutions beats Sutro Biopharma on 8 of the 15 factors compared between the two stocks.

About Sutro Biopharma

Sutro Biopharma, Inc. operates as a clinical-stage oncology company. The company develops site-specific and novel-format antibody drug conjugates (ADCs) that enables its proprietary integrated cell-free protein synthesis platform, XpressCF and XpressCF+. Its product candidates include STRO-002, an ADC directed against folate receptor-alpha, which is in Phase II/III clinical trials for patients with ovarian and endometrial cancers; VAX-24 and Vax-31 pneumococcal conjugate vaccine candidates that is in Phase II/III clinical trials for the treatment of invasive pneumococcal disease; and MK-1484, a distinct cytokine derivative molecule that is in Phase I clinical study for the treatment of cancer. The company's pre-clinical product candidates include STRO-003, an ADC directed against an anti-receptor tyrosine kinase-like orphan receptor 1 (ROR1) for the treatment of solid tumors and hematological cancers; and STRO-004, a tissue factor (TF) targeting ADC for the treatment of TF-expressing solid tumors, including cervical, lung, and breast cancer. Sutro Biopharma, Inc. has collaboration and license agreements with Merck Sharp & Dohme Corporation to develop research programs focusing on cytokine derivatives for cancer and autoimmune disorders; Vaxcyte to discover and develop vaccine candidates for the treatment or prophylaxis of infectious diseases; Tasly Biopharmaceuticals Co., Ltd. to develop and commercialize STRO-002 in Greater China; EMD Serono to develop ADCs for multiple cancer targets; and Astellas Pharma Inc. to develop immunostimulatory ADC. The company was formerly known as Fundamental Applied Biology, Inc. Sutro Biopharma, Inc. was incorporated in 2003 and is headquartered in South San Francisco, California.

About Emergent Biosolutions

Emergent BioSolutions Inc., a life sciences company, provides preparedness and response solutions for accidental, deliberate, and naturally occurring public health threats in the United States. The company offers NARCAN Nasal Spray for the emergency treatment of known or suspected opioid overdose; Vaxchora vaccine for the prevention of cholera; Vivotif vaccine for oral administration for the prevention of typhoid fever; Anthrasil for the treatment of inhalational anthrax; BioThrax, an anthrax vaccine; CYFENDUS for post-exposure prophylaxis of disease following suspected or confirmed exposure to Bacillus anthracis; and Raxibacumab injection for the treatment and prophylaxis of inhalational anthrax. It also provides ACAM2000, a smallpox vaccine; CNJ-016 to address complications from smallpox vaccination; TEMBEXA for the treatment of smallpox disease caused by variola virus in adult and pediatric patients; BAT for the treatment of symptomatic botulism; Ebanga for the treatment of Ebola; Reactive Skin Decontamination Lotion Kit to remove or neutralize chemical warfare agents from the skin; Trobigard, a atropine sulfate obidoxime chloride auto-injector. In addition, the company is developing CGRD-001 for the treatment of poisoning by organophosphorus nerve agents or organophosphorus compounds; EBS-LASV to prevent Lassa fever; EBS-MARV to prevent Marburg virus disease; EBS-SUDV to prevent Sudan virus disease; Pan-Ebola mAbs for the treatment of ebola virus; SIAN Antidote for initial treatment of certain or suspected acute cyanide poisoning; UniFlu for immunity against influenza A and B viruses; and WEVEE-VLP for equine encephalitis virus infections. Further, it provides contract development and manufacturing services comprising drug substance and product manufacturing, and packaging, as well as technology transfer, process, and analytical development services. The company was incorporated in 1998 and is headquartered in Gaithersburg, Maryland.