Financial Review: Surmodics (NASDAQ:SRDX) vs. Avinger (NASDAQ:AVGR)

Avinger (NASDAQ:AVGR) and Surmodics (NASDAQ:SRDX) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of recent ratings for Avinger and Surmodics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avinger	0	0	1	0	3.00
Surmodics	0	4	0	0	2.00

Avinger currently has a consensus price target of $5.00, suggesting a potential upside of 936.05%. Surmodics has a consensus price target of $50.00, suggesting a potential upside of 25.79%. Given Avinger’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Avinger is more favorable than Surmodics.

Profitability

This table compares Avinger and Surmodics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avinger	-261.06%	-5,527.11%	-123.25%
Surmodics	-9.15%	-3.79%	-2.55%

Institutional and Insider Ownership

18.3% of Avinger shares are owned by institutional investors. Comparatively, 96.6% of Surmodics shares are owned by institutional investors. 43.7% of Avinger shares are owned by insiders. Comparatively, 8.9% of Surmodics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Avinger has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, Surmodics has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avinger	$7.26 million	0.22	-$18.32 million	($11.06)	-0.04
Surmodics	$126.08 million	4.52	-$11.54 million	($0.81)	-49.07

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

Summary

Surmodics beats Avinger on 9 of the 14 factors compared between the two stocks.

About Avinger

Avinger, Inc., a commercial-stage medical device company, designs, manufactures, and sells a suite of image-guided and catheter-based systems used by physicians to treat patients with peripheral artery disease (PAD) primarily in the United States and Germany. The company develops lumivascular platform that integrates optical coherence tomography visualization with interventional catheters to provide real-time intravascular imaging during the treatment portion of PAD procedures. Its lumivascular products comprise Lightbox imaging consoles; the Ocelot and Tigereye family of devices, which are designed to allow physicians to penetrate a total blockage in an artery; and Pantheris, an image-guided atherectomy device that allows physicians to precisely remove arterial plaque in PAD patients. The company is also developing IMAGE-BTK for the treatment of PAD lesions below-the-knee. It markets and sells its products to interventional cardiologists, vascular surgeons, and interventional radiologists. The company was incorporated in 2007 and is based in Redwood City, California.

About Surmodics

Surmodics, Inc., together with its subsidiaries, provides performance coating technologies for intravascular medical devices, and chemical and biological components for in vitro diagnostic immunoassay tests and microarrays in the United States and internationally. It operates through two segments, Medical Device and In Vitro Diagnostics (IVD). The Medical Device segment engages in the provision of surface modification coating technologies to enhance access, deliverability, and predictable deployment of medical devices; and drug-delivery coating technologies to provide site-specific drug-delivery from the surface of a medical device for neurovascular, peripheral, coronary, and structural heart, and other markets, as well as manufacturing of vascular intervention medical devices, including drug-coated balloons, mechanical thrombectomy devices, and radial access balloon catheters and guide sheaths. The IVD segment develops, manufactures, and sells chemical and biological components for in vitro diagnostic immunoassay and molecular tests, as well as diagnostic and biomedical research markets. This segment offers protein stabilizers, substrates, surface coatings, and antigens. The company was founded in 1979 and is headquartered in Eden Prairie, Minnesota.