Wednesday, BTIG initiated coverage on InMode Ltd . (NASDAQ: NASDAQ:INMD) with a Buy rating and set a price target of $25.00. The firm highlighted InMode's position as a leading provider of energy-based, minimally invasive surgical aesthetic treatments. Despite InMode's significant commercial success with a Compound Annual Growth Rate (CAGR) of approximately 38% from 2018 to 2023, its stock is currently trading at a four-year low. This decline is attributed to a recent contraction in demand for aesthetic capital equipment and procedures.
The downturn in capital equipment purchases within the aesthetic market is largely seen as a result of the broader macroeconomic uncertainty. Some market observers have expressed concerns about InMode's business model, suggesting it may be challenged by a saturated market. However, BTIG analysts believe that InMode has potential avenues for growth once the economy stabilizes. They point to the company's newly launched IgniteRF platform, which has received positive feedback from an early adopter due to its clinical enhancements and efficiency.
BTIG's analysis suggests that while InMode has moved beyond the early adoption phase, there are still significant opportunities for expansion, particularly in international markets and in new medical sectors such as gynecology and ophthalmology. The firm acknowledges that it's not clear when the current economic cycle will bottom out, but notes InMode's continued profitability, low capital expenditure requirements, and a strong balance sheet as indicators of the company's ability to endure market fluctuations.
The report concludes by emphasizing InMode's attractive valuation, with the stock trading at eight times BTIG's 2025 earnings forecast. This valuation, coupled with the company's financial stability and growth prospects, forms the basis for the firm's Buy rating and $25 price target.
In other recent news, InMode Ltd. has reported a third-quarter revenue projection of approximately $130.0-130.1 million, surpassing market expectations and reflecting a 5.6% year-over-year growth. Despite this, the company has revised its full-year 2024 revenue guidance downward to $410-420 million due to persistent pressures in the global aesthetics market. Amid these developments, Baird maintains an Outperform rating on InMode, suggesting a cautiously optimistic outlook.
InMode has also initiated a new share repurchase program, authorizing the buyback of up to 7.68 million ordinary shares. Concurrently, significant changes to its executive team in North America, including the departure of Shakil Lakhani, President of North America, have been announced as part of its global expansion strategy.
Canaccord Genuity has maintained a Hold rating on InMode, citing ongoing risks and uncertainties. These recent developments demonstrate InMode's strategic efforts to navigate market challenges while continuing to innovate in the medical aesthetic treatment sector.
InvestingPro Insights
InvestingPro data and tips offer additional context to BTIG's analysis of InMode Ltd. (NASDAQ: INMD). The company's P/E ratio of 9.42 aligns with BTIG's observation of an attractive valuation, suggesting the stock may be undervalued relative to its earnings. This is further supported by an InvestingPro Tip indicating that the valuation implies a strong free cash flow yield.
Despite the recent market challenges highlighted in the article, InMode's financial health appears robust. An InvestingPro Tip notes that the company holds more cash than debt on its balance sheet, which corroborates BTIG's assessment of InMode's strong financial position. Additionally, the company's high gross profit margin of 82.27% for the last twelve months ending Q2 2024 underscores its operational efficiency.
However, investors should be aware that InMode's revenue growth has been negative, with a -16.16% decline in the last twelve months. This aligns with the article's mention of a recent contraction in demand for aesthetic capital equipment.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for InMode, providing a deeper understanding of the company's financial landscape and market position.
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