Critical Analysis: Mereo BioPharma Group (NASDAQ:MREO) and Spruce Biosciences (NASDAQ:SPRB)

Spruce Biosciences (NASDAQ:SPRB) and Mereo BioPharma Group (NASDAQ:MREO) are both small-cap healthcare companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Volatility & Risk

Spruce Biosciences has a beta of 3.57, suggesting that its stock price is 257% more volatile than the S&P 500. Comparatively, Mereo BioPharma Group has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500.

Profitability

This table compares Spruce Biosciences and Mereo BioPharma Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Spruce Biosciences	N/A	-118.22%	-88.36%
Mereo BioPharma Group	N/A	-84.62%	-71.44%

Institutional & Insider Ownership

91.7% of Spruce Biosciences shares are held by institutional investors. Comparatively, 62.8% of Mereo BioPharma Group shares are held by institutional investors. 4.3% of Spruce Biosciences shares are held by company insiders. Comparatively, 6.5% of Mereo BioPharma Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Spruce Biosciences and Mereo BioPharma Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spruce Biosciences	$4.91 million	24.57	-$38.97 million	($33.71)	-1.25
Mereo BioPharma Group	$500,000.00	97.41	-$41.88 million	($0.04)	-7.62

Spruce Biosciences has higher revenue and earnings than Mereo BioPharma Group. Mereo BioPharma Group is trading at a lower price-to-earnings ratio than Spruce Biosciences, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for Spruce Biosciences and Mereo BioPharma Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spruce Biosciences	1	0	11	0	2.83
Mereo BioPharma Group	2	3	3	0	2.12

Spruce Biosciences presently has a consensus price target of $158.33, suggesting a potential upside of 276.70%. Mereo BioPharma Group has a consensus price target of $1.67, suggesting a potential upside of 446.45%. Given Mereo BioPharma Group’s higher probable upside, analysts plainly believe Mereo BioPharma Group is more favorable than Spruce Biosciences.

Summary

Spruce Biosciences beats Mereo BioPharma Group on 7 of the 13 factors compared between the two stocks.

About Spruce Biosciences

Spruce Biosciences is a biotechnology company focused on developing treatments for rare endocrine disorders. The U.S.-based company has concentrated on conditions with limited treatment options and has advanced oral drug candidates through clinical development. Its lead investigational candidate, tildacerfont, is a corticotropin-releasing factor type 1 receptor antagonist that Spruce studied for congenital adrenal hyperplasia, a rare disorder affecting hormone production. The company also evaluated the candidate for other endocrine conditions, including polycystic ovary syndrome.

About Mereo BioPharma Group

Mereo BioPharma Group plc is a clinical-stage biopharmaceutical company focused on developing therapies for rare diseases and oncology. The company’s research programs are intended to address conditions with significant unmet medical needs, using biologic and small-molecule drug candidates. Mereo’s lead program is setrusumab, an investigational monoclonal antibody designed to inhibit sclerostin and stimulate bone formation. The therapy is being developed for osteogenesis imperfecta, a rare genetic disorder characterized by fragile bones, through a collaboration with Ultragenyx Pharmaceutical.