Critical Analysis: NeuroPace (NASDAQ:NPCE) versus Akili (NASDAQ:AKLI)

NeuroPace (NASDAQ:NPCE) and Akili (NASDAQ:AKLI) are both small-cap medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, profitability, risk and earnings.

Volatility and Risk

NeuroPace has a beta of 2.08, indicating that its share price is 108% more volatile than the S&P 500. Comparatively, Akili has a beta of 1.99, indicating that its share price is 99% more volatile than the S&P 500.

Insider & Institutional Ownership

78.8% of NeuroPace shares are held by institutional investors. Comparatively, 53.1% of Akili shares are held by institutional investors. 27.5% of NeuroPace shares are held by insiders. Comparatively, 10.1% of Akili shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for NeuroPace and Akili, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NeuroPace	0	1	6	0	2.86
Akili	0	0	1	0	3.00

NeuroPace presently has a consensus price target of $15.67, indicating a potential upside of 16.05%. Akili has a consensus price target of $4.00, indicating a potential upside of 1,421.49%. Given Akili’s stronger consensus rating and higher possible upside, analysts clearly believe Akili is more favorable than NeuroPace.

Earnings & Valuation

This table compares NeuroPace and Akili’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NeuroPace	$65.42 million	5.42	-$32.96 million	($1.28)	-10.55
Akili	$1.68 million	12.31	-$59.49 million	($0.76)	-0.35

NeuroPace has higher revenue and earnings than Akili. NeuroPace is trading at a lower price-to-earnings ratio than Akili, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares NeuroPace and Akili’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NeuroPace	-50.38%	-153.76%	-31.73%
Akili	-3,545.47%	-76.34%	-56.48%

Summary

NeuroPace beats Akili on 8 of the 14 factors compared between the two stocks.

About NeuroPace

NeuroPace, Inc. operates as a medical device company in the United States. The company develops RNS system, a brain-responsive neuromodulation system that delivers personalized, real-time treatment at the seizure source for treating medically refractory focal epilepsy. It also records continuous brain activity data and enables clinicians to monitor patients in person and remotely. Its RNS System includes RNS neurostimulator, cortical strip and depth leads, and Patient Remote Monitor, as well as other implantable and non-implantable accessories. The company sells its products to hospital facilities for initial RNS system implant procedures and for replacement procedures. NeuroPace, Inc. was incorporated in 1997 and is headquartered in Mountain View, California.

About Akili

Akili, Inc., a digital medicine company, develops cognitive treatments through game-changing technologies. The company provides EndeavorRx, a computer-based testing for cognitive dysfunction across several neurology and psychiatry indications, including attention-deficit hyperactivity disorder, depressive disorder, autism spectrum disorder, multiple sclerosis, and other neuroinflammatory diseases. It also offers selective stimulus management engine mechanism to activate the fronto-parietal cortex area in the brain; body brain trainer for attention, impulsivity, working memory, and goal management; and spatial navigation engine for spatial navigation, memory, and planning and organization. The company was founded in 2011 and is headquartered in Boston, Massachusetts.