Contrasting Spectral AI (NASDAQ:MDAI) & Neuronetics (NASDAQ:STIM)

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

Profitability

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

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

Analyst Recommendations

This is a summary of current ratings and price targets for Spectral AI and Neuronetics, as provided by MarketBeat.com.

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

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

Institutional & Insider Ownership

67.1% of Spectral AI shares are held by institutional investors. Comparatively, 53.6% of Neuronetics shares are held by institutional investors. 30.7% of Spectral AI shares are held by company insiders. Comparatively, 9.8% of Neuronetics shares are held by company 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 and Earnings

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

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

Spectral AI has higher earnings, but lower revenue 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.

Volatility and Risk

Spectral AI has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, Neuronetics has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Summary

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

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.

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.