Critical Analysis: Butterfly Network (NYSE:BFLY) & HeartSciences (NASDAQ:HSCS)

Butterfly Network (NYSE:BFLY) and HeartSciences (NASDAQ:HSCS) are both small-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Valuation and Earnings

This table compares Butterfly Network and HeartSciences”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Butterfly Network	$97.61 million	9.42	-$77.06 million	($0.31)	-11.74
HeartSciences	N/A	N/A	-$8.77 million	($6.88)	-0.38

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

Analyst Ratings

This is a summary of recent ratings for Butterfly Network and HeartSciences, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Butterfly Network	2	1	4	0	2.29
HeartSciences	1	0	1	0	2.00

Butterfly Network currently has a consensus target price of $5.56, suggesting a potential upside of 52.82%. HeartSciences has a consensus target price of $9.20, suggesting a potential upside of 248.48%. Given HeartSciences’ higher possible upside, analysts clearly believe HeartSciences is more favorable than Butterfly Network.

Institutional and Insider Ownership

37.9% of Butterfly Network shares are held by institutional investors. Comparatively, 17.2% of HeartSciences shares are held by institutional investors. 25.2% of Butterfly Network shares are held by company insiders. Comparatively, 1.8% of HeartSciences shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Butterfly Network and HeartSciences’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Butterfly Network	-78.95%	-33.13%	-23.73%
HeartSciences	N/A	-388.12%	-161.65%

Volatility and Risk

Butterfly Network has a beta of 2.27, meaning that its stock price is 127% more volatile than the S&P 500. Comparatively, HeartSciences has a beta of 2.53, meaning that its stock price is 153% more volatile than the S&P 500.

Summary

Butterfly Network beats HeartSciences on 8 of the 13 factors compared between the two stocks.

About Butterfly Network

Butterfly Network, Inc. develops, manufactures, and commercializes ultrasound imaging solutions in the United States and internationally. It offers Butterfly iQ, a handheld and single-probe whole body ultrasound system; Butterfly iQ+ and iQ3 ultrasound devices that can perform whole-body imaging in a single handheld probe integrated with the clinical workflow, and accessible on a user's smartphone, tablet, and almost any hospital computer system; and Butterfly iQ+ Vet, a handheld ultrasound system designed for veterinarians. The company also provides Butterfly system, which includes probes, and related accessories and software subscriptions to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and eCommerce channel. In addition, it offers cloud-based software solutions to healthcare systems, teleguidance, in-app educational tutorials, and formal education programs through its Butterfly Academy software, as well as professional services for large scale deployments; and ScanLab, an education-only app provides written walkthroughs and reference imagery to guide real-time educational scanning, enhancing the learning process. Butterfly Network, Inc. was founded in 2011 and is headquartered in Burlington, Massachusetts.

About HeartSciences

Heart Test Laboratories, Inc., a medical technology company, provides cardiovascular diagnostic devices. The company offers MyoVista wavECG, a resting 12-lead electrocardiograph (ECG) to provide diagnostic information related to cardiac dysfunction, as well as conventional ECG information. It serves clinics, doctor's offices, urgent care centers, and hospitals. The company was incorporated in 2007 and is headquartered in Southlake, Texas.