On Tuesday, InMode Ltd . (NASDAQ:INMD) stock received a rating downgrade from a Jefferies analyst. The firm changed its rating from Buy to Hold and adjusted the price target to $19.00 from the previous $21.00.
The revision follows concerns about the challenges within the aesthetics market, which is believed to be under pressure from the broader economic environment. The analyst's decision is based on expectations that the market conditions for aesthetic products will continue to be difficult due to macroeconomic pressures.
InMode, in particular, has been facing challenges in stimulating increased demand for its new platforms. These difficulties are anticipated to potentially affect the company's performance in the second half of 2024.
The Jefferies report also references a proprietary survey of U.S. plastic surgeons, which supports the view that InMode may encounter obstacles in meeting its guidance and consensus estimates for 2024 and 2025. Based on these insights, the analyst has chosen to revise both the price target and the rating for InMode stock.
The lowered price target and downgrade reflect a cautious stance on the company's near-term prospects. The analyst expressed concerns about the risks to InMode's guidance for 2024 and consensus estimates for 2024 and 2025, leading to a more conservative outlook on the stock.
In summary, the updated analysis by Jefferies suggests that InMode Ltd. may face headwinds that could hinder its ability to achieve its financial targets in the coming years. The firm has adjusted its rating and price target accordingly to reflect these potential challenges.
In other recent news, InMode Ltd. reported a shortfall in its second quarter pro forma sales, which are estimated to be between $102.4 million and $102.5 million, compared to the consensus estimate of $116.6 million.
Consequently, the company has adjusted its full-year 2024 revenue forecast to the range of $430 million to $440 million, a decrease from the previous guidance of $485 million to $495 million. In response, Jefferies and UBS have reduced their price targets on InMode's shares to $21 and $20 respectively, while maintaining a Buy and Neutral rating.
InMode reported first-quarter 2024 earnings with a total revenue of $80.3 million, but a significant miss on operating margins, which came in at 27.5% compared to the anticipated 40%, led UBS to maintain a Neutral rating on the company. Despite these challenges, InMode launched two platforms, IgniteRF and Optimus Max, to bolster growth and manage the current economic challenges.
InMode's recent strategic efforts include fulfilling pre-orders and expecting market demand to pick up in the second half of 2024 with a more favorable interest rate environment.
The company's updated 2024 guidance includes revenue between $485 million and $495 million, non-GAAP gross margins of 82%-84%, and non-GAAP EPS of $2.01-$2.05. These developments are part of InMode's recent efforts to navigate the current economic landscape.
InvestingPro Insights
In the wake of the Jefferies analyst's downgrade, a closer look at InMode Ltd. through InvestingPro metrics reveals a nuanced picture. With a market capitalization of approximately $1.5 billion and a P/E ratio standing at 8.21, the company appears to be trading at a value that could attract investors looking for lower-priced earnings potential. Additionally, InvestingPro data indicates a strong gross profit margin of 83.1% in the last twelve months as of Q1 2024, which suggests that despite revenue pressures, the company maintains a high level of efficiency in its operations.
InvestingPro Tips also shed light on InMode's financial health. Notably, the company holds more cash than debt on its balance sheet, which could provide resilience in challenging economic conditions. Moreover, liquid assets exceed short-term obligations, offering further financial stability. However, it's important to note that three analysts have revised their earnings downwards for the upcoming period, which aligns with the concerns raised by Jefferies regarding the company's performance outlook.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that could provide a clearer understanding of InMode's position in the market. Using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes access to a comprehensive set of tips to inform your investment decisions. There are 7 more InvestingPro Tips available for InMode Ltd., which could be particularly useful for those considering this stock in light of recent developments.
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