Critical Review: Butterfly Network (NYSE:BFLY) and HeartSciences (NASDAQ:HSCS)

HeartSciences (NASDAQ:HSCS) and Butterfly Network (NYSE:BFLY) are both small-cap medical companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Risk & Volatility

HeartSciences has a beta of 2.53, indicating that its share price is 153% more volatile than the S&P 500. Comparatively, Butterfly Network has a beta of 2.27, indicating that its share price is 127% more volatile than the S&P 500.

Profitability

This table compares HeartSciences and Butterfly Network’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HeartSciences	N/A	-388.12%	-161.65%
Butterfly Network	-78.95%	-32.05%	-23.52%

Insider & Institutional Ownership

17.2% of HeartSciences shares are owned by institutional investors. Comparatively, 37.9% of Butterfly Network shares are owned by institutional investors. 1.8% of HeartSciences shares are owned by company insiders. Comparatively, 25.2% of Butterfly Network shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for HeartSciences and Butterfly Network, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HeartSciences	1	0	1	0	2.00
Butterfly Network	2	1	4	0	2.29

HeartSciences presently has a consensus target price of $9.20, indicating a potential upside of 251.15%. Butterfly Network has a consensus target price of $5.56, indicating a potential upside of 50.75%. Given HeartSciences’ higher possible upside, research analysts plainly believe HeartSciences is more favorable than Butterfly Network.

Earnings and Valuation

This table compares HeartSciences and Butterfly Network”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HeartSciences	N/A	N/A	-$8.77 million	($6.88)	-0.38
Butterfly Network	$97.61 million	9.55	-$77.06 million	($0.31)	-11.90

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

Summary

Butterfly Network beats HeartSciences on 8 of the 13 factors compared between the two stocks.

About HeartSciences

Heart Test Laboratories, Inc., a medical technology company, provides cardiovascular diagnostic devices. The company offers MyoVista wavECG, a resting 12-lead electrocardiograph (ECG) to provide diagnostic information related to cardiac dysfunction, as well as conventional ECG information. It serves clinics, doctor's offices, urgent care centers, and hospitals. The company was incorporated in 2007 and is headquartered in Southlake, Texas.

About Butterfly Network

Butterfly Network, Inc. develops, manufactures, and commercializes ultrasound imaging solutions in the United States and internationally. It offers Butterfly iQ, a handheld and single-probe whole body ultrasound system; Butterfly iQ+ and iQ3 ultrasound devices that can perform whole-body imaging in a single handheld probe integrated with the clinical workflow, and accessible on a user's smartphone, tablet, and almost any hospital computer system; and Butterfly iQ+ Vet, a handheld ultrasound system designed for veterinarians. The company also provides Butterfly system, which includes probes, and related accessories and software subscriptions to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and eCommerce channel. In addition, it offers cloud-based software solutions to healthcare systems, teleguidance, in-app educational tutorials, and formal education programs through its Butterfly Academy software, as well as professional services for large scale deployments; and ScanLab, an education-only app provides written walkthroughs and reference imagery to guide real-time educational scanning, enhancing the learning process. Butterfly Network, Inc. was founded in 2011 and is headquartered in Burlington, Massachusetts.