Lipocine Inc. (NASDAQ:LPCN) shares are down more than -45.64% this year and recently decreased -45.95% or -$1.59 to settle at $1.87. Galectin Therapeutics, Inc. (NASDAQ:GALT), on the other hand, is up 64.67% year to date as of 01/10/2018. It currently trades at $5.50 and has returned 29.11% during the past week.

Lipocine Inc. (NASDAQ:LPCN) and Galectin Therapeutics, Inc. (NASDAQ:GALT) are the two most active stocks in the Drugs – Generic industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.

**Cash Flow **

The amount of free cash flow available to investors is ultimately what determines the value of a stock. LPCN’s free cash flow (“FCF”) per share for the trailing twelve months was -0.22. Comparatively, GALT’s free cash flow per share was -0.09.

**Liquidity and Financial Risk**

Liquidity and leverage ratios are important because they reveal the financial health of a company. LPCN has a current ratio of 10.50 compared to 1.60 for GALT. This means that LPCN can more easily cover its most immediate liabilities over the next twelve months.

**Valuation**

LPCN trades at a P/B of 1.64, compared to for GALT. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

**Analyst Price Targets and Opinions**

When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. LPCN is currently priced at a -84.42% to its one-year price target of 12.00. Comparatively, GALT is -21.43% relative to its price target of 7.00. This suggests that LPCN is the better investment over the next year.

The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 1.50 for LPCN and 2.00 for GALT, which implies that analysts are more bullish on the outlook for GALT.

**Risk and Volatility**

Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. LPCN has a beta of 0.99 and GALT’s beta is 2.50. LPCN’s shares are therefore the less volatile of the two stocks.

**Insider Activity and Investor Sentiment**

The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. LPCN has a short ratio of 4.22 compared to a short interest of 3.07 for GALT. This implies that the market is currently less bearish on the outlook for GALT.

**Summary**

Lipocine Inc. (NASDAQ:LPCN) beats Galectin Therapeutics, Inc. (NASDAQ:GALT) on a total of 5 of the 13 factors compared between the two stocks. LPCN generates a higher return on investment and higher liquidity. LPCN is more undervalued relative to its price target. Finally, ZTS has better sentiment signals based on short interest.