Allogene Therapeutics vs. Precision BioSciences: A Deep Dive into Two Promising Gene Therapy Stocks

Which is the Better Investment: Allogene Therapeutics or Precision BioSciences?

Allogene Therapeutics (ALLO) and Precision BioSciences (DTIL) are both innovative, small-cap biotechnology companies specializing in gene editing and immunotherapy. But which of these two stocks is the better investment? In this article, we will compare their financials, profitability, analyst recommendations, institutional ownership, and volatility to give you a clearer picture of their strengths and weaknesses.

Profitability and Performance Metrics

The first factor to examine is profitability. Both companies are currently struggling with negative margins, but there are notable differences in their financial performance.

• Allogene Therapeutics has a staggering net margin of -223,139.98%, with negative returns on both equity (-52.13%) and assets (-41.29%). This reflects the significant challenges it faces in bringing its innovative treatments to market.
• Precision BioSciences, on the other hand, shows more encouraging results with a net margin of 11.48%. While still operating at a loss, it has managed to deliver a positive return on assets (-6.98%) and a return on equity of -23.69%, indicating some progress in profitability.

Earnings & Valuation Comparison

Moving on to earnings and valuation, Precision BioSciences has a clear advantage in terms of revenue generation.

• Precision BioSciences reported $75.1 million in gross revenue, significantly higher than Allogene’s $43,000. The Price/Sales ratio for Precision is just 0.46, indicating it is relatively undervalued compared to Allogene, which has a ratio of 11,458.82.
• In terms of earnings per share (EPS), Allogene posted a negative EPS of -$1.56, while Precision recorded a small positive EPS of $0.06. Despite Precision’s higher revenue, its Price/Earnings ratio is a steep 75.00, signaling that it may be more expensive compared to Allogene, which is currently priced at a negative P/E ratio.

Institutional Ownership: Who’s Backing These Stocks?

Institutional ownership can provide insight into the level of confidence that large investors have in a company’s long-term prospects.

• Allogene Therapeutics has 83.6% of its shares held by institutional investors, a strong sign that major players in the investment world have confidence in the company’s future.
• Precision BioSciences has only 38.0% of its shares held by institutions, reflecting somewhat less backing from the big players in the market.

Additionally, insider ownership also tells a story of commitment. 24.3% of Allogene’s shares are held by company insiders, indicating strong internal confidence. In contrast, insiders hold only 4.0% of Precision BioSciences shares.

Analyst Recommendations & Future Potential

When it comes to analyst recommendations, Precision BioSciences appears to have the upper hand.

• Allogene Therapeutics has a rating score of 2.90, with 9 buy ratings and only 1 hold rating. Analysts currently suggest a price target of $9.73, which represents a potential upside of 314.18%.
• Precision BioSciences, however, has a slightly higher rating score of 3.00, with 2 buy ratings and a higher upside potential, as analysts project a price target of $39.50, which suggests an upside of 777.78%.

The analysts’ consensus on Precision BioSciences is more favorable, suggesting stronger future growth potential compared to Allogene.

Volatility and Risk

Volatility is another crucial aspect to consider when investing in biotech stocks, as the sector tends to experience higher fluctuations.

• Allogene Therapeutics has a beta of 0.86, meaning its share price is 14% less volatile than the broader market (S&P 500). This might appeal to risk-averse investors looking for a more stable biotech option.
• Precision BioSciences, however, has a higher beta of 1.51, indicating that it is 51% more volatile than the S&P 500. While this suggests greater risk, it may also present opportunities for higher returns if the company successfully capitalizes on its gene editing technologies.

Summary of Comparison

In summary, Precision BioSciences emerges as the stronger company across several key metrics, including higher revenue, positive net margins, and a more favorable analyst outlook. However, Allogene Therapeutics has its strengths, particularly in institutional and insider ownership, which indicates strong backing and confidence in its long-term potential.

For investors seeking more stability, Allogene may be the better option, while those willing to take on more risk for higher upside potential might lean toward Precision BioSciences.

As always, it’s essential to conduct thorough research and consider your risk tolerance before making any investment decisions in the biotechnology sector.