InMode Ltd. (INMD) is a leading developer and supplier of innovative, energy-based, minimally-invasive surgical medical treatment solutions globally. Within the aesthetics market, InMode’s products and solutions are primarily developed to handle three energy-based therapy kinds, including (i) face and body contouring; (ii) medical esthetics; and (iii) women’s health.
The company’s visionary products have constantly been at the forefront of technological evolution in the aesthetic solutions market, and combined with growing market demand, InMode’s top and bottom lines have proliferated over the past few years.
While the stock has been beaten down substantially over the past few months, the company’s latest results demonstrated InMode’s ability to sustain its growth and achieve robust profits. For this reason, I remain bullish on the stock.
No Signs of Slowing Down
InMode’s revenue and net income have constantly been reaching new all-time highs, following multiple product launches by the company and ever-growing market demand. The number of patients looking for minimally invasive treatments remains at sky-high levels, continuing to drive fantastic revenue growth and resulting in consumables and services growing by 78% year-over-year in Q4.
Specifically, InMode’s revenue for the period grew 47% year-over-year to $110.5 million, while net income reached $52.7 million, up 45.9% against Q4-2020, illustrating disciplined cost management and robust margin retention.
Gross margins and net margins remained sky-high, at 85% and 47.6%, respectively. The company is admiringly profitable. In my view, an exceptionally low number of companies can consistently post such high net income margins, and InMode is one of them.
The company also ended the quarter with a total cash position of $415.9 million, which is quite wonderful since it also features $0 of long-term debt on the balance sheet. Hence, I wouldn’t be surprised if we potentially saw any dividends or stock repurchases going forward as the net cash position develops over time.
How Much is INMD Stock Worth?
InMode’s impressive growth pace has led to the stock experiencing a great rally since its IPO. That said, InMode had run ahead of itself and was rather overvalued around October’s highs. Since then, shares have corrected significantly.
Management guided for FY-2022 revenues between $415 million and $425 million and adjusted EPS between $2.06 and $2.11. At InMode’s current price levels, this implies a forward P/E of 24.8 at the midpoint of management’s range. Taking into account the company’s growth metrics and rich margins, I believe that shares are quite cheap here, offering significant upside.
Wall Street’s Take
According to TipRanks, InMode has a Moderate Buy consensus rating based on one Buy assigned in the past three months. At $82.00, INMD’s price target implies 58.61% upside potential over the next 12 months.
Conclusion
In my opinion, InMode is operating in a very advantageous market climate, with demand in the aesthetics industry increasing dramatically. Moreover, following the stock’s steep fall, it seems to me that InMode is quite attractively priced, taking into account the company’s current net income growth trajectory and management’s guidance. For this reason, I am bullish on the stock.
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