Critical Contrast: Nephros (NASDAQ:NEPH) & Hyperfine (NASDAQ:HYPR)

Nephros (NASDAQ:NEPH) and Hyperfine (NASDAQ:HYPR) are both small-cap healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Volatility & Risk

Nephros has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500. Comparatively, Hyperfine has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500.

Profitability

This table compares Nephros and Hyperfine’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nephros	8.38%	10.60%	8.05%
Hyperfine	-210.75%	-97.88%	-61.81%

Institutional and Insider Ownership

41.1% of Nephros shares are held by institutional investors. Comparatively, 15.0% of Hyperfine shares are held by institutional investors. 8.3% of Nephros shares are held by insiders. Comparatively, 26.3% of Hyperfine shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nephros	$20.72 million	1.66	$1.19 million	$0.16	19.81
Hyperfine	$16.54 million	5.03	-$35.57 million	($0.38)	-2.06

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Nephros and Hyperfine, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nephros	0	3	1	0	2.25
Hyperfine	1	1	3	0	2.40

Nephros presently has a consensus price target of $4.00, indicating a potential upside of 26.18%. Hyperfine has a consensus price target of $2.02, indicating a potential upside of 158.09%. Given Hyperfine’s stronger consensus rating and higher possible upside, analysts clearly believe Hyperfine is more favorable than Nephros.

Summary

Nephros beats Hyperfine on 9 of the 14 factors compared between the two stocks.

About Nephros

Nephros, Inc., a commercial-stage company, develops and sells water solutions to the medical and commercial markets in the United States. It offers ultrafiltration products that are used in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate; and in hospitals for the prevention of infection from waterborne pathogens, such as legionella and pseudomonas, as well as in military and outdoor recreation, commercial, and other healthcare facilities. The company also manufactures and sells water filters that enhance the taste and odor of water, as well as reduce biofilm, cysts, particulates, and scale build-up in downstream equipment. It markets its products to food service, hospitality, convenience store, and health care markets, as well as medical institutions. The company was incorporated in 1997 and is headquartered in South Orange, New Jersey.

About Hyperfine

Hyperfine, Inc., a medical device company, provides magnetic resonance imaging (MRI) products in the United States. The company offers Swoop Portable MR imaging system, which offers portable brain neuroimaging; and support and technical assistance services. It serves ICU, comprehensive, and primary stroke accredited facilities through direct sales and distributors. Hyperfine, Inc. was founded in 2014 and is based in Guilford, Connecticut.