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InMode: Looks Fair Around Here

Jun. 12, 2020 6:53 PM ETInMode Ltd. (INMD) Stock9 Comments


  • InMode has been a very interesting stock and story since it went public last summer.
  • First quarter results are soft, with procedures essentially halted for a month, but adjusted for that, the performance was resilient.
  • Leverage is no issue given the large net cash balance and the fact that the business is still profitable.
  • The stock is trading at a market multiple for operating assets, while growth potential even excluding COVID-19 seems more limited. I have some doubts about the quality of the operations, and this makes shares seem fairly valued.
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After a tumultuous first half of 2020 in which shares of InMode (NASDAQ:INMD) have seen excessive volatility, it is time to update the thesis after shares have stabilized again around the $30 mark.

After going public at levels in the mid-teens in August of last year, shares had seen a huge momentum run as valuation was very modest at the time of the IPO, with shares hitting a momentum-induced high of around $55 in November. Shares actually re-tested the IPO price, losing essentially three-quarters of their value as they were trading at $14 and change in March, now trading at around the $30 mark again.

The Thesis

My last take on the company dates back to this premium article in February, as shares fell to levels in the high thirties at the time, as no one could have expected the shares to trade at $15 just a month later.

I noted that the company just reported solid fourth quarter results and outlined a decent outlook for 2020, as reduced valuation multiples and growing net cash were starting to look compelling. At the same time, I reiterated my skepticism on the business model to some extent as it is hard to pick the winners upfront and estimate how longevity the success story and therapies could be. Nonetheless, I was looking to initiate on dips again, as InMode has been a big winner for me in 2019.

InMode is a minimally invasive technology company that has developed and develops human aesthetics therapies. These therapies are based on so-called "energy" methods and focus on the face and body contouring and medical aesthetics. This kind of therapy method has advantages of less pain and scarring compared to other alternatives.

Demographic trends, a greater focus on aesthetics, and general wealth on the increase mean that the demand

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This article was written by

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The Value Investor has a Master of Science with specialization in financial markets and a decade of experience tracking companies via catalytic company events.

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Analyst’s Disclosure: I am/we are long INMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (9)

This article almost talked me into selling, but now I'm really glad I didn't after seeing their MUCH BETTER qtr then expected. The common sense comments below the article talked me out of selling(strong profits, no debt). Good lesson to keep to the basics and not overthink it) especially when you are talking about peoples hard earned money). Go INMD, GO!
Long term patient investor, enjoy the ride
Big holder in Inmode. Love the numbers and play on vanity post pandemic. But, came across recent short..Thoughts?

Saying annualized eps of .60 to .80 based on Q1 is very unfair unless you believe INMD will not recover this year. Zacks has consensus eps of $1.09 for the year. Many states & countries are opening up ( afew states & countries didn't even shut down) Once this is over there will be a large pent up demand. As mentioned INMD did 3 months of growth in 2 months in Q1. Mgmt also said new sales were not lost but deferred. I am expecting good things in Q3 & 4 when new products will be introduced.
Coasting along here, excited about 3 new product launches in third quarter to propel stock price back up higher where it belongs!
WP89 profile picture
I bought the stock when it was $17 and I'll see if it can be bought in the future under $20 because it gives a substantial margin of safety even if growth slows.
Jared Krongold CMT profile picture
Lots of cash and no debt in a growing industry... while some businesses are getting really hurt right now, this one isn’t, warranting some sort of higher multiple. I like the sales push unless the government closes the country down again... The true long term drivers though are more products and more revenue from services!
INMD is an ideal BUY & HOLD stock---plenty of cash--no debt--and GAAP profitable every Quarter. Management reported--2020 Revenue won't be much different or lower than 2019--despite factoring the negative effect of the Corona Virus.With high tech products mostly beneficial to the Women population of the World--with lasting effect on their beauty & appearance--the potential growth of this stock is HUGE!!
Never bet against the vanity of humans 🙂
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