Critical Review: Establishment Labs (NASDAQ:ESTA) versus AxoGen (NASDAQ:AXGN)

AxoGen (NASDAQ:AXGN) and Establishment Labs (NASDAQ:ESTA) are both mid-cap healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Profitability

This table compares AxoGen and Establishment Labs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AxoGen	-11.96%	-5.35%	-4.41%
Establishment Labs	-14.56%	-185.60%	-10.49%

Valuation and Earnings

This table compares AxoGen and Establishment Labs”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AxoGen	$225.21 million	13.09	-$15.70 million	($0.65)	-75.95
Establishment Labs	$245.82 million	7.57	-$51.06 million	($1.28)	-48.80

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

Analyst Recommendations

This is a summary of current ratings and price targets for AxoGen and Establishment Labs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AxoGen	1	2	13	0	2.75
Establishment Labs	1	0	9	0	2.80

AxoGen presently has a consensus price target of $57.92, indicating a potential upside of 17.31%. Establishment Labs has a consensus price target of $95.00, indicating a potential upside of 52.10%. Given Establishment Labs’ stronger consensus rating and higher probable upside, analysts plainly believe Establishment Labs is more favorable than AxoGen.

Risk and Volatility

AxoGen has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Establishment Labs has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Institutional & Insider Ownership

80.3% of AxoGen shares are held by institutional investors. Comparatively, 72.9% of Establishment Labs shares are held by institutional investors. 2.4% of AxoGen shares are held by company insiders. Comparatively, 10.0% of Establishment Labs shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

AxoGen beats Establishment Labs on 9 of the 14 factors compared between the two stocks.

About AxoGen

AxoGen, Inc., together with its subsidiaries, develops and commercializes technologies for peripheral nerve regeneration and repair worldwide. The company’s products include Avance Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site; AxoGuard Nerve Connector, a porcine submucosa extracellular matrix (ECM) coaptation aid for tensionless repair of severed peripheral nerves; AxoGuard Nerve Protector, a porcine submucosa ECM product that is used to wrap and protect damaged peripheral nerves, as well as reinforces the nerve reconstruction while preventing soft tissue attachments; and Axoguard HA+ Nerve Protector, a processed porcine submucosa ECM base layer with a hyaluronate-alginate gel coating designed to provide short- and long-term protection for peripheral nerve injuries. Its products also comprise Axoguard Nerve Cap, a porcine submucosa ECM product that is used to protect a peripheral nerve end, as well as separates the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma; and AxoTouch two-point discriminator, a tool that is used for measuring the innervation density of surface area of the skin. The company provides its products to hospitals, surgery centers, and military hospitals, plastic reconstructive surgeons, orthopedic and plastic hand surgeons, and various oral and maxillofacial surgeons. AxoGen, Inc. is headquartered in Alachua, Florida.

About Establishment Labs

Establishment Labs Holdings Inc., a medical technology company, manufactures and markets medical devices for aesthetic and reconstructive plastic surgery. The company primarily offers silicone gel-filled breast implants under the Motiva Implants brand. It also provides Motiva Ergonomix and Motiva Ergonomix2 gravity sensitive round soft silicone-gel-filled breast implants; and Motiva Flora Tissue Expander, a breast tissue expander. The company sells its products to physicians, hospitals, and clinics through distributors and direct sales force in Europe, the Middle East, Latin America, and Asia. Establishment Labs Holdings Inc. was incorporated in 2004 and is headquartered in Alajuela, Costa Rica.