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InMode Stock (NASDAQ:INMD): Still Reasonably Priced Even after Going Vertical
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InMode Stock (NASDAQ:INMD): Still Reasonably Priced Even after Going Vertical

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Contrarian investors might bristle at the thought of holding InMode after a sharp rally. Don’t dismiss INMD stock yet, though, as the company’s guidance revision indicates that more share-price gains could be imminent.

InMode (NASDAQ:INMD) doesn’t usually get much attention from financial traders. It’s going vertical today, though, but still could have room to run. I am bullish on INMD stock in light of InMode’s optimistic forward guidance, which is definitely putting investors in a good mood right now.

InMode is an Israeli company that develops minimally-invasive radio frequency technologies for surgical procedures and other treatments. InMode’s technologies can be applied to a wide range of use cases, including dermatology, ophthalmology, plastic surgery, and more.

I completely understand if you feel that medical technology stocks are risky. That’s certainly true to a certain extent, but today, I’ll make the case that INMD stock isn’t excessively risky and might even deserve a place in your portfolio for 2023’s second half.

InMode is a Consistent Earnings Beater

If you’ve researched publicly-listed medical device companies, you’ll surely know that some of them are unprofitable start-ups. Indeed, while I won’t mention any names, some of them deserve the “zombie” label. Thankfully, InMode doesn’t fit into that category at all, and that’s why INMD stock is somewhat de-risked for investors.

I encourage you to take a look at InMode’s earnings track record. Quarter after quarter for the past three years, InMode has been profitable on a per-share basis – something we can’t say about every medical technology company. Not only that, but InMode has consistently beaten Wall Street’s quarterly EPS forecasts during that time.

Truly, IMND stock is a hidden secret among most U.S. financial traders. Maybe that’s because it’s an Israeli company, so it probably doesn’t get enough publicity in America. As we’ll discuss in a moment, there aren’t many U.S. analysts covering InMode. Hopefully, that will change in the coming quarters.

It shouldn’t be too surprising if INMD gets more attention on Wall Street soon, as the stock zoomed higher in midday trading today. Does this mean it’s too late to consider owning the stock now? I’d say the answer is no since InMode’s GAAP trailing 12-month price-to-earnings (P/E) ratio of around 22.5x is still significantly lower than the sector median P/E ratio of 28.1x.

InMode’s Revenue Guidance Seals the Deal

Personally, I envision an encouraging future for non-invasive surgical technologies, especially since there’s a huge number of aging Baby Boomers and Generation X-ers who may need surgery in the coming years. InMode truly is a future-proofed business, and the company’s recently revised revenue guidance reflects the management’s confidence.

Here’s the scoop. InMode’s second-quarter 2023 financial results aren’t set to be released until July 26. However, the company just released its preliminary results for the quarter. Overall, the pre-results appear to be quite healthy. For example, InMode expects to report non-GAAP gross margin in the range of 83% to 85% – not too shabby, you must admit.

Furthermore, InMode expects to report Q2-2023 revenue in the range of $135.7 million to $135.9 million. Taking a look at InMode’s financials, we can see that this would represent a continuation of a quarterly revenue uptrend during the past year.

Looking forward to the full year of 2023, InMode predicts that it will generate revenue in the range of $530 million to $540 million. That’s an increase from the company’s previous guidance of $525 million to $530 million. Therefore, InMode’s management clearly expects to sell plenty of medical technology products.

Finally, we’ll circle back to the top-line results. For Q2 of 2023, InMode expects to report non-GAAP earnings per diluted share in the range of $0.70 to $0.71. That would be a positive outcome since the consensus EPS estimate is $0.64.

Is INMD Stock a Buy, According to Analysts?

Turning to Wall Street, INMD is a Moderate Buy based on just two Buy ratings. The average InMode stock price target is $50, implying 12% upside potential.

If you’re wondering which analyst you should follow if you want to buy and sell INMD stock, the most accurate analyst covering the stock (on a one-year timeframe) is Matthew Taylor of Jefferies, with an average return of 128.51% per rating and an 82% success rate. Click on the image below to learn more.

Conclusion: Should You Consider INMD Stock?

Sure, it’s somewhat risky to invest in medical technology stocks. However, InMode doesn’t seem too risky, as the company has been consistently profitable and now anticipates strong quarterly and full-year results.

So, perhaps you might be interested in taking a chance on an Israeli company that’s operating in a niche medical market with powerful growth potential. With that in mind, feel free to consider a small but confident share position in INMD stock.

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