Comparing Avid Bioservices (NASDAQ:CDMO) and Arcutis Biotherapeutics (NASDAQ:ARQT)

Arcutis Biotherapeutics (NASDAQ:ARQT) and Avid Bioservices (NASDAQ:CDMO) are both small-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.

Volatility and Risk

Arcutis Biotherapeutics has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500. Comparatively, Avid Bioservices has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500.

Valuation and Earnings

This table compares Arcutis Biotherapeutics and Avid Bioservices”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcutis Biotherapeutics	$196.54 million	10.12	-$262.14 million	($1.16)	-14.46
Avid Bioservices	$139.91 million	5.71	-$140.75 million	($2.39)	-5.23

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

Analyst Ratings

This is a breakdown of recent recommendations for Arcutis Biotherapeutics and Avid Bioservices, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcutis Biotherapeutics	0	1	5	0	2.83
Avid Bioservices	0	4	0	0	2.00

Arcutis Biotherapeutics presently has a consensus price target of $18.80, suggesting a potential upside of 12.10%. Avid Bioservices has a consensus price target of $12.25, suggesting a potential downside of 1.96%. Given Arcutis Biotherapeutics’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Arcutis Biotherapeutics is more favorable than Avid Bioservices.

Institutional & Insider Ownership

97.2% of Avid Bioservices shares are held by institutional investors. 9.5% of Arcutis Biotherapeutics shares are held by company insiders. Comparatively, 3.1% of Avid Bioservices shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Arcutis Biotherapeutics and Avid Bioservices’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arcutis Biotherapeutics	-140.97%	-119.11%	-45.95%
Avid Bioservices	-101.07%	-33.18%	-8.45%

Summary

Arcutis Biotherapeutics beats Avid Bioservices on 8 of the 14 factors compared between the two stocks.

About Arcutis Biotherapeutics

Arcutis Biotherapeutics, Inc., a biopharmaceutical company, focuses on developing and commercializing treatments for dermatological diseases. Its lead product candidate is ARQ-151, a topical roflumilast cream that has completed Phase III clinical trials for the treatment of plaque psoriasis and atopic dermatitis. The company is also developing ARQ-154, a topical ZORYVE for the treatment of scalp and body psoriasis and seborrheic dermatitis; ARQ-252, a selective topical janus kinase type 1 inhibitor for hand eczema and vitiligo; ARQ-255, a topical JAK1 inhibitor for alopecia areata; and ARQ-234, a CD200R fusion protein for the treatment of moderate-to-severe atopic dermatitis. The company was formerly known as Arcutis, Inc. and changed its name to Arcutis Biotherapeutics, Inc. in October 2019. Arcutis Biotherapeutics, Inc. was incorporated in 2016 and is headquartered in Westlake Village, California.

About Avid Bioservices

Avid Bioservices, Inc. operates as a contract development and manufacturing organization for the biotechnology and biopharmaceutical industries in the United States. It provides process development and current good manufacturing practice clinical and commercial manufacturing services of biologics, including clinical and commercial drug substance manufacturing, bulk packaging, release and stability testing, regulatory submission and support, upstream and downstream development and optimization, analytical methods development, cell line development, testing, and characterization services. The company was formerly known as Peregrine Pharmaceuticals, Inc. and changed its name to Avid Bioservices, Inc. in January 2018. Avid Bioservices, Inc. was incorporated in 1981 and is based in Tustin, California.