Comparing Mesoblast (NASDAQ:MESO) and Scholar Rock (NASDAQ:SRRK)

Mesoblast (NASDAQ:MESO) and Scholar Rock (NASDAQ:SRRK) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, valuation and risk.

Risk & Volatility

Mesoblast has a beta of 3.48, meaning that its stock price is 248% more volatile than the S&P 500. Comparatively, Scholar Rock has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Mesoblast and Scholar Rock, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mesoblast	0	1	3	0	2.75
Scholar Rock	0	0	6	1	3.14

Mesoblast currently has a consensus price target of $22.50, indicating a potential upside of 256.01%. Scholar Rock has a consensus price target of $26.00, indicating a potential upside of 198.51%. Given Mesoblast’s higher possible upside, analysts clearly believe Mesoblast is more favorable than Scholar Rock.

Earnings & Valuation

This table compares Mesoblast and Scholar Rock’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mesoblast	$7.50 million	96.22	-$81.89 million	($1.12)	-5.64
Scholar Rock	$33.19 million	20.93	-$165.79 million	($2.09)	-4.17

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

Insider and Institutional Ownership

1.4% of Mesoblast shares are owned by institutional investors. Comparatively, 91.1% of Scholar Rock shares are owned by institutional investors. 18.8% of Mesoblast shares are owned by insiders. Comparatively, 26.2% of Scholar Rock 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.

Profitability

This table compares Mesoblast and Scholar Rock’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mesoblast	N/A	N/A	N/A
Scholar Rock	N/A	-94.20%	-65.81%

About Mesoblast

Mesoblast Limited engages in the development of regenerative medicine products in Australia, the United States, Singapore, and Switzerland. The company offers products in the areas of cardiovascular, spine orthopedic disorder, oncology, hematology, and immune-mediated and inflammatory diseases. Its proprietary regenerative medicine technology platform is based on specialized cells known as mesenchymal lineage cells. The company offers Remestemcel-L that is in Phase III clinical trials for the treatment of systemic inflammatory diseases, including steroid refractory acute graft versus host disease, acute respiratory distress syndrome, and biologic refractory inflammatory bowel disease; and Remestemcel-L, which is in Phase III clinical trials to treat chronic heart failure and chronic low back pain due to degenerative disc disease. It is also developing MPC-300-IV to treat biologic refractory rheumatoid arthritis diabetic nephropathy; and MPC-25-IC for the treatment or prevention of acute myocardial infarction. It has strategic partnerships with Tasly Pharmaceutical Group to offer MPC-150-IM for heart failure and MPC-25-IC for heart attacks in China; JCR Pharmaceuticals Co. Ltd. to treat wound healing in patients with epidermolysis bullosa; and Grünenthal to develops and commercializes cell therapy for the treatment of chronic low back pain. The company was incorporated in 2004 and is headquartered in Melbourne, Australia.

About Scholar Rock

Scholar Rock Holding Corporation, a biopharmaceutical company, focuses on the discovery, development, and delivery of medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role. The company develops Apitegromab, an inhibitor of the activation of myostatin that is in Phase 3 clinical trial for the treatment of spinal muscular atrophy; and SRK-181, which has completed Phase 1 clinical trials for the treatment of cancers that are resistant to checkpoint inhibitor therapies, such as anti-PD-1 or anti-PD-L1 antibody therapies. It is developing a pipeline of product candidates to deliver novel therapies to treat a range of serious diseases, including neuromuscular disorders, cardiometabolic disorders, cancer, fibrosis, and iron-restricted anemia. Scholar Rock Holding Corporation was founded in 2012 and is headquartered in Cambridge, Massachusetts.