Critical Review: LENSAR (NASDAQ:LNSR) versus Neuronetics (NASDAQ:STIM)

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

Institutional and Insider Ownership

40.2% of LENSAR shares are owned by institutional investors. Comparatively, 53.6% of Neuronetics shares are owned by institutional investors. 66.0% of LENSAR shares are owned by insiders. Comparatively, 9.8% of Neuronetics shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LENSAR	$53.49 million	2.84	-$31.40 million	($4.39)	-2.90
Neuronetics	$74.89 million	1.91	-$43.71 million	($0.82)	-2.55

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

Analyst Ratings

This is a summary of recent ratings and price targets for LENSAR and Neuronetics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LENSAR	1	2	0	0	1.67
Neuronetics	1	0	1	0	2.00

LENSAR presently has a consensus target price of $15.00, suggesting a potential upside of 17.83%. Neuronetics has a consensus target price of $7.00, suggesting a potential upside of 234.93%. Given Neuronetics’ stronger consensus rating and higher possible upside, analysts plainly believe Neuronetics is more favorable than LENSAR.

Volatility and Risk

LENSAR has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, Neuronetics has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500.

Profitability

This table compares LENSAR and Neuronetics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LENSAR	-87.12%	N/A	-73.64%
Neuronetics	-33.88%	-131.15%	-31.26%

Summary

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

About LENSAR

LENSAR, Inc., a commercial-stage medical device company, focuses on designing, developing, and marketing a femtosecond laser system for the treatment of cataracts and the management of pre-existing or surgically induced corneal astigmatism. It offers LENSAR Laser System that incorporates a range of proprietary technologies designed to assist the surgeon in obtaining visual outcomes, efficiency, and reproducibility by providing imaging, procedure planning, design, and precision. The company also offers ALLY Adaptive Cataract Treatment System, a platform design to femtosecond laser technology features that enhanced laser capabilities into a single small unit that allows surgeons to perform a femtosecond laser assisted cataract procedure in a single operating room. LENSAR, Inc. was incorporated in 2004 and is headquartered in Orlando, Florida.

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.