Avita Medical (NASDAQ:RCEL – Get Free Report) and NexGel (NASDAQ:NXGL – Get Free Report) are both small-cap healthcare companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.
Profitability
This table compares Avita Medical and NexGel’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Avita Medical | -56.96% | N/A | -78.53% |
| NexGel | -51.26% | -121.18% | -41.15% |
Insider & Institutional Ownership
27.7% of Avita Medical shares are owned by institutional investors. Comparatively, 2.2% of NexGel shares are owned by institutional investors. 2.2% of Avita Medical shares are owned by insiders. Comparatively, 19.8% of NexGel shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Avita Medical | $71.61 million | 4.25 | -$48.59 million | ($1.44) | -6.86 |
| NexGel | $11.42 million | 0.25 | -$3.00 million | ($0.71) | -0.41 |
NexGel has lower revenue, but higher earnings than Avita Medical. Avita Medical is trading at a lower price-to-earnings ratio than NexGel, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent ratings for Avita Medical and NexGel, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Avita Medical | 1 | 1 | 5 | 0 | 2.57 |
| NexGel | 1 | 1 | 0 | 0 | 1.50 |
Avita Medical presently has a consensus price target of $11.40, suggesting a potential upside of 15.38%. NexGel has a consensus price target of $2.00, suggesting a potential upside of 587.05%. Given NexGel’s higher possible upside, analysts plainly believe NexGel is more favorable than Avita Medical.
Volatility & Risk
Avita Medical has a beta of 2.02, indicating that its stock price is 102% more volatile than the S&P 500. Comparatively, NexGel has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500.
About Avita Medical
AVITA Medical, Inc., together with its subsidiaries, operates as a regenerative medicine company in the United States and internationally. The company's lead product is the RECELL System, a cell harvesting device used for the treatment of thermal burn wounds, full-thickness skin defects, and repigmentation of stable depigmented vitiligo lesions. It develops RECELL GO to control the manual process of disaggregation, filtration, and soak time. The company was formerly known as AVITA Therapeutics, Inc. AVITA Medical, Inc. was incorporated in 2020 and is headquartered in Valencia, California.
About NexGel
NEXGEL, Inc. manufactures high water content, electron beam cross-linked, and aqueous polymer hydrogels and gels. Its products are used for wound care, medical diagnostics, transdermal drug delivery, and cosmetics. The company was formerly known as AquaMed Technologies, Inc. and changed its name to NEXGEL, Inc. in November 2019. The company was incorporated in 2009 and is based in Langhorne, Pennsylvania.
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