Neuronetics (NASDAQ:STIM) & Spectral AI (NASDAQ:MDAI) Critical Contrast

Neuronetics (NASDAQ:STIM) and Spectral AI (NASDAQ:MDAI) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.

Valuation & Earnings

This table compares Neuronetics and Spectral AI”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Neuronetics	$74.89 million	1.23	-$43.71 million	($0.82)	-1.63
Spectral AI	$29.58 million	1.45	-$15.31 million	($0.74)	-1.89

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Neuronetics and Spectral AI, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Neuronetics	1	0	1	0	2.00
Spectral AI	1	0	2	0	2.33

Neuronetics presently has a consensus target price of $7.00, indicating a potential upside of 422.39%. Spectral AI has a consensus target price of $3.25, indicating a potential upside of 132.14%. Given Neuronetics’ higher possible upside, equities analysts plainly believe Neuronetics is more favorable than Spectral AI.

Profitability

This table compares Neuronetics and Spectral AI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Neuronetics	-33.88%	-131.15%	-31.26%
Spectral AI	-70.64%	N/A	-27.57%

Insider & Institutional Ownership

53.6% of Neuronetics shares are owned by institutional investors. Comparatively, 67.1% of Spectral AI shares are owned by institutional investors. 8.7% of Neuronetics shares are owned by insiders. Comparatively, 30.7% of Spectral AI shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Neuronetics has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Spectral AI has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Summary

Spectral AI beats Neuronetics on 10 of the 14 factors compared between the two stocks.

About Neuronetics

Neuronetics, Inc., a commercial stage medical technology company, designs, develops, and markets products for patients with neurohealth disorders in the United States and internationally. The company offers NeuroStar Advanced Therapy System, a non-invasive and non-systemic office-based treatment to treat adult patients with major depressive disorder. Its NeuroStar Advanced Therapy System uses transcranial magnetic stimulation to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The company sells its products through its sales and customer support team to psychiatrists. The company was incorporated in 2001 and is headquartered in Malvern, Pennsylvania.

About Spectral AI

Spectral AI, Inc., an artificial intelligence (AI) company, focuses on developing predictive medical diagnostics in the United States. The company develops medical diagnostics for faster and accurate treatment decisions in wound care with applications involving patients with burns and diabetic foot ulcers. Its products include DeepView System, a predictive analytics platform integrated with the predictive AI-Burn, which combines AI algorithms and multispectral imaging (MSI) imaging for an assessment of wound healing potential and offers clinicians an objective and immediate assessment of a wound’s healing potential prior to treatment or other medical intervention; and DeepView SnapShot M, a handheld, portable, and wireless diagnostic tool, that provides a potential enhanced and expanded use for the government and emergency care, first responders, and potentially home health care professionals. The company is headquartered in Dallas, Texas.