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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#4786
Positioning
Market Dominance
Manufacturing
Pharmaceutical Products
$328M
Denise V. Scots-Knight
Mereo BioPharma Group plc, a biopharmaceutical company, acquires, develops, and commercializes therapeutics for the treatment of oncology and rare diseases in the United Kingdom and internationally. Its lead product candidate, etigilimab (OMP-313M32), an antibody T-cell immunoreceptor with Ig and ITIM domains, which is in Phase 1b clinical trial for the treatment of tumor. The company is also developing Navicixizumab (OMP-305B83), which has completed Phase 1b clinical trials for the treatment of the late line ovarian cancer; Acumapimod (BCT-197), a p38 MAP kinase inhibitor that is in Phase II clinical trials to treat acute exacerbations of chronic obstructive pulmonary disease; and Leflutrozole (BGS-649), an oral aromatase inhibitor for the treatment of hypogonadotropic hypogonadism. In addition, it develops rare disease product candidates, including Setrusumab (BPS-804), a novel antibody for the treatment of osteogenesis imperfecta; and Alvelestat (MPH-966), an oral small molecule that is in Phase II clinical trial to treat Alpha-1 antitrypsin deficiency. Mereo BioPharma Group plc was founded in 2015 and is based in London, the United Kingdom.
Headcount
40
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| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UL UNILEVER PLC | 78 | 96 | 98 | 59 | - | - | 28.5% | 8.0% | 100.0% | 100.0% | 10.4% | -4.6% | 3.3% | 0.0x | $141.8B | VS | |
$ASML ASML HOLDING NV | 77 | 89 | 86 | 83 | - | - | 46.1% | 16.6% | 51.3% | 31.9% | 26.8% | -4.0% | 1.0% | 25.0x | $272.1B | VS | |
$ESLT ELBIT SYSTEMS LTD | 76 | 81 | 87 | 85 | - | - | 10.3% | 3.1% | 24.1% | 7.2% | 4.7% | 14.3% | 0.8% | 25.0x | $11.4B | VS | |
$MT ArcelorMittal | 75 | 71 | 98 | 85 | - | - | 2.2% | 1.5% | 9.3% | 5.3% | 2.2% | -8.5% | 2.2% | 16.0x | $18.9B | VS | |
$AMAT APPLIED MATERIALS INC /DE | 75 | 85 | 87 | 84 | 20.9x | 13.6x | 35.5% | 19.8% | 48.7% | 29.2% | 24.7% | 4.4% | 0.8% | 32.0x | $181.9B | VS | |
$SIMO Silicon Motion Technology CORP | 75 | 84 | 86 | 85 | - | - | 11.8% | 8.8% | 45.9% | 11.3% | 11.1% | 25.7% | 3.7% | 0.0x | $1.8B | VS | |
$CODA Coda Octopus Group, Inc. | 74 | 83 | 90 | 79 | 16.3x | 11.9x | 7.6% | 7.0% | 66.5% | 17.1% | 15.6% | 39.0% | 0.0% | 0.0x | $115M | VS | |
$GSK GSK plc | 74 | 84 | 90 | 70 | - | - | 22.6% | 4.9% | 71.2% | 12.8% | 9.4% | 1.7% | 5.9% | 124.0x | $72.1B | VS | |
$EFXT Enerflex Ltd. | 74 | 80 | 91 | 83 | - | - | 3.0% | 1.1% | 20.9% | 7.3% | 1.3% | 3.0% | 0.9% | 67.0x | $1.2B | VS | |
$BUD Anheuser-Busch InBev SA/NV | 74 | 84 | 97 | 63 | - | - | 8.2% | 3.5% | 55.3% | 25.9% | 12.4% | 0.7% | 1.7% | 0.0x | $87.0B | VS | |
$MREO Mereo BioPharma Group plc | 25 | 25 | 39 | 3 | - | - | -106.3% | -92.4% | - | -2099.8% | -2923.2% | - | 0.0% | 15.0x | $328M | ||
| SECTOR BENCH | - | - | - | - | - | 22.3x | 11.5x | -2.5% | -0.1% | 42.5% | 1.3% | -0.2% | 5.9% | 0.0% | 0.2x | - | REF |
Mereo BioPharma Group plc (MREO) receives a "Avoid" rating with a composite score of 24.5/100. It ranks #4786 out of 7,333 stocks in our coverage universe and carries a 1-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Operating efficiency
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
Denise V. Scots-Knight
Chief Executive Officer
Labor Force
40
25
25
23
Audit Verdict: Lower quality and stability scores may indicate governance concerns.
No recent insider transactions available for MREO
HQ Base
Pending Verification
Lagging peers — losers tend to keep underperforming
Fair valuation relative to peers
Weak fundamentals — higher risk of value trap
High volatility — wider range of outcomes increases timing risk
Aggressive spending — empire-building risk, dilutive growth
Below-average composite — caution warranted
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Relative valuation derived from Manufacturing sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
No analyst ratings for MREO.
View All RatingsHigh margin volatility — erratic forensic earnings quality
ROE proxy -106.3% (sector -2.5%)
GM N/A vs sector 43%, OM -2100% vs sector 1%
Capital turnover N/A
Rev growth N/A, 8yr history
Interest coverage -357.7x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
Our quantitative model flags Mereo BioPharma Group plc with an Avoid rating, assigning a composite score of 24.5/100 and 1 out of 5 stars. Ranked #4786 of 7,333 stocks, MREO falls in the bottom tier across key factors. Historically, stocks with this profile have faced elevated risk of underperformance and capital loss.
MREO's quality score of 25/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of -106.3% (sector avg: -2.5%), net margins of -2923.2% (sector avg: -0.2%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
With a value score of 39/100, MREO appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/B ratio of 1.43x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
Mereo BioPharma Group plc's investment score of 25/100 suggests limited reinvestment activity. Key growth metrics include a return on assets of -92.4% (sector: -0.1%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
Mereo BioPharma Group plc is experiencing notably weak momentum with a score of just 3/100. The stock has underperformed its peers and is trending below major moving averages. Revenue growth data is not currently available, while a beta of 1.27 reflects its sensitivity to broader market moves. While deep momentum weakness can occasionally present value opportunities, it often reflects deteriorating fundamentals or structural headwinds that may persist.
Mereo BioPharma Group plc registers a low stability score of 23/100, indicating high volatility and potentially stressed financial conditions. Key stability metrics include a beta of 1.27 and a debt-to-equity ratio of 15.00x (sector avg: 0.2x). Stocks at this level carry elevated capital loss risk and may be unsuitable for conservative portfolios without careful risk management.
The short interest score of 50/100 for MREO suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include above-average market sensitivity (beta: 1.27), elevated leverage (D/E: 15.00x), small-cap liquidity risk. With a $328M market cap (small-cap), Mereo BioPharma Group plc may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
Mereo BioPharma Group plc is a small-cap company in the Manufacturing sector, ranked #0 of 50 in its sector (100th percentile) and #4786 of 7,333 overall (35th percentile). Key comparisons include ROE of -106.3% trailing the -2.5% sector median and operating margins of -2099.8% below the 1.3% sector average. This top-quartile standing reflects exceptional competitive strength relative to Manufacturing peers.
While MREO currently exhibits a AVOID profile, superior opportunities exist within the MANUFACTURING sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Improvement in Momentum (3) would have the largest impact on the composite score.
ROE 4186% ABOVE SECTOR MEDIAN (FAVORABLE)
Op. Margin 162875% BELOW SECTOR MEDIAN
Debt/Equity 7400% ABOVE SECTOR MEDIAN
AUDIT DATA AS OF SEP 30, 2025 (Q2 FY2025)
We rate Mereo BioPharma Group plc (MREO) as Avoid with a composite score of 24.5/100 at a current price of $0.40. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.
The rating is primarily driven by strength in value (39th percentile) and investment (25th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (3th percentile) and stability (23th percentile) tempers our overall conviction. We assign a No Moat rating (23/100), Very High uncertainty, and Poor capital allocation.
Key items to watch: momentum to confirm whether the current price trend has legs; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is narrowing, which raises the risk of a future downgrade if the trend persists.
Mereo BioPharma Group plc holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 24.5/100 places it at rank #4786 in our full 7,333-stock universe. At $328M in market capitalization, Mereo BioPharma Group plc is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.
Momentum indicators (3th percentile) suggest caution regarding the near-term price trend. Revenue growth data is unavailable, limiting our ability to confirm whether momentum is fundamentally supported.
Available margin data shows operating margins of -2100%. Incomplete margin data limits our ability to fully assess the cost structure and margin trajectory, though the available metrics provide a partial view of operating efficiency.
At a current price of $0.40, Mereo BioPharma Group plc is trading at a premium to fundamental value. Our value factor score of 39/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.
The stock currently trades at P/B of 1.4x, P/S of 133.7x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.
A conservative balance sheet (15% D/E) provides financial flexibility for acquisitions, buybacks, or weathering economic downturns without dilution.
The Avoid rating (composite 24.5/100) reflects multi-factor weakness, and historically, stocks in this scoring range have underperformed the market by a meaningful margin.
Thin net margins of -2923.2% provide limited cushion against cost pressures, competitive pricing, or macroeconomic headwinds — even small changes in costs could swing the company to a loss.
Weak momentum (3th percentile) suggests institutional selling pressure and unfavorable technical dynamics that may persist.
Below-average quality (25th percentile) raises durability concerns about the fundamental profile and increases the risk of negative earnings surprises.
We assign a Very High uncertainty rating to Mereo BioPharma Group plc. The stock exhibits multiple compounding risk factors: current negative profitability (net margin -2923.2%), below-average price stability (23th percentile), weak quality scores (25th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.
Specific risk factors that inform our assessment include: current negative profitability (net margin -2923.2%); below-average price stability (23th percentile); weak quality scores (25th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 23th percentile and quality factor at the 25th percentile provide a quantitative summary of the overall risk landscape.
Key risk mitigants include: conservative leverage (15% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.
We rate Mereo BioPharma Group plc's capital allocation as Poor. Key concerns include low returns on equity (-106.3%), negative profitability, weak asset returns (ROA -92.4%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Mereo BioPharma Group plc significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.
Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.
In summary, Mereo BioPharma Group plc receives a Avoid rating with a composite score of 24.5/100 (rank #4786 of 7,333). Our quantitative framework assigns a No Moat (23/100, trend: narrowing), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 23/100.
Our analysis does not support a constructive view on Mereo BioPharma Group plc at this time. The combination of limited competitive advantages, very high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We do not assign Mereo BioPharma Group plc a meaningful economic moat, scoring 23/100 on our composite assessment. Current fundamentals do not demonstrate the kind of durable competitive advantages — such as superior returns on invested capital, margin superiority, or reinvestment efficiency — that would protect the company from competitive erosion over the long term. The highest-scoring pillar, financial resilience, reached only 7.3/20.
The strongest moat sources are financial resilience (7.3/20) and growth durability (7.2/20). Interest coverage -357.7x. Rev growth N/A, 8yr history. These pillars form the core of Mereo BioPharma Group plc's competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include reinvestment efficiency (0/20) and economic value creation (2.1/20). Capital turnover N/A. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Narrowing. ROIC has declined at ~26.2pp per year, and operating margins show fundamental deterioration. Investors should monitor these indicators closely — a sustained narrowing trend often precedes material downgrades in our moat assessment.
Key profit drivers are not clearly identifiable from current fundamentals. This may reflect a company in transition, a cyclical downturn, or structural challenges in the business model. We assign a quality factor of 25/100 which further underscores our concern regarding earnings sustainability.
The margin profile shows operating margins of -2100%, net margins of -2923.2%. Return metrics include ROE of -106.3% and ROA of -92.4%. Relative to the Manufacturing sector, sector comparison data is limited, and ROE of -106.3% compares to a sector median of -2.5%.
The balance sheet reflects a conservatively managed balance sheet with D/E of 15%. The sector median D/E is 0%, putting Mereo BioPharma Group plc at higher leverage than the typical peer. Overall balance sheet health is adequate for the current business environment.
Above 50MA
37.18%
Net New Highs
+51081
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