SurModics (NASDAQ: SRDX) and T2 Biosystems (NASDAQ:TTOO) are both small-cap medical companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, valuation, risk, institutional ownership and earnings.

Earnings and Valuation

This table compares SurModics and T2 Biosystems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SurModics $73.11 million 5.16 $3.92 million $0.29 99.31
T2 Biosystems $4.10 million 36.62 -$54.80 million ($1.91) -2.19

SurModics has higher revenue and earnings than T2 Biosystems. T2 Biosystems is trading at a lower price-to-earnings ratio than SurModics, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for SurModics and T2 Biosystems, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SurModics 0 0 2 0 3.00
T2 Biosystems 1 1 4 0 2.50

SurModics currently has a consensus price target of $40.00, indicating a potential upside of 38.89%. T2 Biosystems has a consensus price target of $6.83, indicating a potential upside of 63.09%. Given T2 Biosystems’ higher probable upside, analysts plainly believe T2 Biosystems is more favorable than SurModics.

Risk & Volatility

SurModics has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, T2 Biosystems has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.

Profitability

This table compares SurModics and T2 Biosystems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SurModics 5.37% 6.18% 5.11%
T2 Biosystems -1,497.70% -244.82% -78.53%

Insider and Institutional Ownership

85.6% of SurModics shares are owned by institutional investors. Comparatively, 59.7% of T2 Biosystems shares are owned by institutional investors. 6.4% of SurModics shares are owned by insiders. Comparatively, 38.7% of T2 Biosystems shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

SurModics beats T2 Biosystems on 8 of the 13 factors compared between the two stocks.

About SurModics

Surmodics, Inc. is a provider of medical device and in vitro diagnostic technologies to the healthcare industry. The Company operates through two segments: Medical Device and In Vitro Diagnostics. The Company’s Medical Device segment consists of surface modification coating technologies to improve access, deliverability and predictable deployment of medical devices; international cardiology and peripheral balloon design, development and manufacturing, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device. The Company’s In Vitro Diagnostics segment manufactures or sells components for in vitro diagnostic immunoassay and molecular tests. The In Vitro Diagnostics segment manufactures and sells surface coatings to the diagnostic, biomedical research and life science markets. In Vitro Diagnostics segment offers protein stabilization reagents, substrates, antigens and surface coatings.

About T2 Biosystems

T2 Biosystems, Inc. is an in vitro diagnostics company engaged in developing a technology platform offering an alternative to diagnostic methodologies. The Company’s T2 Magnetic Resonance platform (T2MR) enables detection of pathogens, biomarkers and other abnormalities in a range of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum and urine, and can detect cellular targets at limits of detection as one colony forming unit per milliliter (CFU/mL). The Company’s initial development efforts target sepsis, hemostasis and Lyme disease. T2MR is a miniaturized, magnetic resonance-based approach that measures how water molecules react in the presence of magnetic fields. Its platform detects a range of targets, including molecular targets, such as deoxyribonucleic acid (DNA), immunodiagnostics, such as proteins, and a range of hemostasis measurements. The Company offers T2Dx Instrument (T2Dx) and the T2Candida Panel.

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