Stock (Symbol) |
InMode (INMD) |
Stock Price |
$39 |
Sector |
| Healthcare |
Data is as of |
| August 23, 2023 |
Expected to Report |
| October 25 |
Company Description |
 Inmode Ltd is an Israel-based global provider of energy-based, minimally-invasive surgical medical treatment solutions.
Company products and solutions are primarily designed to address three energy-based treatment categories comprised of: face and body contouring; medical aesthetics; and women’s health. The Company have developed and commercialized products utilizing medically-accepted RF energy technology, which can penetrate deep into the subdermal fat, allowing adipose tissue remodeling. It’s RF energy-based proprietary technologies – Radio Frequency Assisted Lipolysis (RFAL), Deep Subdermal Fractional RF, Simultaneous Fat Destruction and Skin Tightening and Deep Heating Collagen Remodeling for skin and human natural openings- represent a paradigm shift in the minimally-invasive aesthetic solutions market. These technologies are used by physicians to remodel subdermal adipose, or fatty tissue in a variety of procedures. Source: Refinitiv |
Sharek’s Take |
 Medical device maker InMode (INMD) had another great quarter. Profit grew 22% while revenue was up 20%. The company had record revenues from its International segment, with sales from Asia hitting a new record. International revenue was 36% of total revenue last quarter. There are improvements to be made Internationally. Management said that the number of doctors who buy systems with lease packages is lower Internationally than in the United States. The company is working with a European bank to put together lease package plans. InMode also has two new subsidiaries, one in Japan and another in Germany, which are markets that the company wants to sell directly in.
Founded in Israel in 2008, InMode is a developer of minimally invasive surgical medical equipment, focusing on three areas: (1) face and body contouring, (2) medical aesthetics, and (3) women’s health. It operates in 92 countries with a sales team of 264 sales reps utilizing 7 patented technologies across 10 product families. Its products utilize the company’s proprietary Radio Frequency (RF) energy technologies, which can penetrate deep into fat and allow tissue remodeling. Doctors utilize InMode equipment for liposuction and skin tightening, permanent hair reduction, face and body contouring, ablative skin treatments, and treatments for vaginal issues for women in menopause. Each product consists of a small platform that incorporates energy sources, a hand piece, proprietary software, and a touch screen. In 2022, InMode launched a women’s health device, Envision, in Canada. Envision is expected launch in the US soon. Management is gradually building a dedicated sales team for women’s health. The company derives revenue from InMode devices, as well as consumables (like razor blades to a razor). Here’s a breakdown of revenue by category last quarter:
InMode’s platforms (devices) include:
INMD stock looks to be a deal. I’ve been watching the stock for years, waiting for a good opportunity to buy in. This seems to be one of them. Analysts give the stock an Estimated Long-Term Growth Rate of 14% while the P/E is only 15. INMD is part of the Growth Portfolio. Envision could become somewhat of a catalyst for the stock long-term. |
One Year Chart |
 INMD broke out of a year-long base when the stock rose to $45 in July, I bought the stock around that time. Since then the shares have settled back to around $40 in what has been a weak stock market.
The P/E is only 15 which is very reasonable. I think the P/E should be 22. Note the Est. LTG of 14%. That’s pretty good. But this figure was 17% 2QtrsAgo and 33% 3QtrsAgo. I like the steady profit growth the past four quarters. What’s not great is qtrly profit growth is expected to be just +2% and -3% the next two qtrs. But INMD beat the street by 8 cents last quarter, and if it does so this quarter that would be profit growth of 14%. |
Earnings Table |
 Last qtr, INMD delivered 22% profit growth and beat estimates of 8%. Revenue grew 20% against expectations of 15%.
Minimally invasive and under-the-skin treatments were 81% of revenue. Hands-free platform was 9% of sales. Non-invasive treatments were 10% of sales. Growth was driven by strong demand particularly due to strong seasonality for consumables. Annual Profit Estimates for 202 are slightly up this qtr. Management maintains its guidance for fiscal 2023 with profits between $2.58 and $2.60 per share. 2023 profits are expected to climb just 10%%. That’s not much. I like my growth stocks to grow profits 15% to 20% a year or more. Quarterly profit estimates are for 2%, -3%, 12%, and 8% profit growth the next four quarters. Analysts expect revenue to grow 14% this quarter. Recall last qtr’s revenue estimate was 15% and the company delivered 20% growth. |
Fair Value |
 INMD has a P/E of only 15, which I think is a bargain. The stock had a wild history where the P/E was just 16 in 2020, shot up to 48 at the stock’s height in 2021 (the $99 stock was going to make $2.05 in profits), then fell to 19 last year. COVID-19 hurt this company as they could not do in-person demonstrations.
My Fair Value is a P/E of 22, or $59 a share, which is around 50% upside from here. |
Bottom Line |
 InMode (INMD) had its IPO in August 2019 and opened at $7 a share. The stock was a market leader in 2021 and went on a parabolic run and peaked at $99 in November 2021. The stock then went into a 6-month selloff and fell all the way to $21. I went back and looked at the news at the time, and the company continued to do well, but had some supply chain shortage that had a small impact on profit margins.
INMD seems like a bargain of a stock, with very good upside. INMD moves from 18th to 17th in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
17 of 30Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
