Critical Survey: Inspire Medical Systems (NYSE:INSP) and Merit Medical Systems (NASDAQ:MMSI)

Inspire Medical Systems (NYSE:INSP) and Merit Medical Systems (NASDAQ:MMSI) are both mid-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Risk and Volatility

Inspire Medical Systems has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Merit Medical Systems has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Profitability

This table compares Inspire Medical Systems and Merit Medical Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Inspire Medical Systems	0.85%	1.03%	0.88%
Merit Medical Systems	9.02%	15.29%	8.58%

Analyst Recommendations

This is a breakdown of recent recommendations for Inspire Medical Systems and Merit Medical Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Inspire Medical Systems	0	4	8	0	2.67
Merit Medical Systems	0	2	9	1	2.92

Inspire Medical Systems presently has a consensus target price of $219.58, indicating a potential upside of 7.99%. Merit Medical Systems has a consensus target price of $101.82, indicating a potential upside of 6.62%. Given Inspire Medical Systems’ higher probable upside, equities research analysts clearly believe Inspire Medical Systems is more favorable than Merit Medical Systems.

Institutional and Insider Ownership

94.9% of Inspire Medical Systems shares are owned by institutional investors. Comparatively, 99.7% of Merit Medical Systems shares are owned by institutional investors. 4.1% of Inspire Medical Systems shares are owned by company insiders. Comparatively, 3.7% of Merit Medical Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Inspire Medical Systems and Merit Medical Systems”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Inspire Medical Systems	$705.71 million	8.56	-$21.15 million	($0.55)	-369.69
Merit Medical Systems	$1.30 billion	4.26	$94.41 million	$1.74	54.89

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

Summary

Merit Medical Systems beats Inspire Medical Systems on 11 of the 15 factors compared between the two stocks.

About Inspire Medical Systems

Inspire Medical Systems, Inc., a medical technology company, focuses on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea (OSA) in the United States and internationally. The company offers Inspire system, a neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. It also develops a novel, closed-loop solution that continuously monitors a patient's breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. The company was incorporated in 2007 and is headquartered in Golden Valley, Minnesota.

About Merit Medical Systems

Merit Medical Systems, Inc. designs, develops, manufactures, and markets single-use medical products for interventional, diagnostic, and therapeutic procedures in the United States and internationally. It operates in two segments, Cardiovascular and Endoscopy. The company provides micropuncture kits, angiographic needles, sheaths, guide wires, and safety products; peripheral intervention, including angiography, drainage, delivery systems, and embolotherapy products; spine products, such as vertebral augmentation, radiofrequency ablation, and bone biopsy systems; oncology products; and cardiac intervention products, such as access, angiography, electrophysiology and cardiac rhythm management, fluid management, hemodynamic monitoring, hemostasis, and intervention to treat various heart conditions. It also offers custom procedural solutions that include critical care products, disinfection protection systems, syringes, manifold kits, and trays and packs; coating services for medical tubes and wires; and sensor components for microelectromechanical systems. In addition, the company provides pulmonary products that consist of laser-cut tracheobronchial stents, over-the-wire and direct visualization delivery systems, and dilation balloons to endoscopically dilate structures; gastroenterology products, such as covered esophageal stents, syringe and gauges, and balloon dilators; and kits and accessories for endoscopy and bronchoscopy procedures. It sells its products to hospitals and alternate site-based physicians, technicians, and nurses through direct sales force, distributors, original equipment manufacturer partners, or custom procedure tray manufacturers. The company was incorporated in 1987 and is headquartered in South Jordan, Utah.