INMD - InMode Does Not Look Pretty Right Now: Time To Buy

2024-03-26 04:21:43 ET

Summary

• Despite a highly profitable business model and a strong position in the medical aesthetics industry, INMD stock is down -33% over the last 12 months.
• Macroeconomic pressures, political risks in InMode’s home country Israel, and, to a lesser extent, suboptimal capital allocation have caused the stock to plummet.
• InMode continues to deliver cutting-edge innovation and expand its commercial capabilities, steadily gaining market share.
• Even without a share buyback program, INMD is grossly undervalued unless you believe the conflicts in Israel will escalate.
• With a fair value of $31 (range $25 to $39), it is time to buy INMD while most investors paint an ugly outlook for this aesthetics leader.

InMode Ltd. ( INMD ) is a leading global provider of innovative medical aesthetic technologies, specializing in minimally-invasive procedures. Renowned for its cutting-edge radio-frequency-based platforms such as BodyTite, Evoke, and Morpheus8, InMode revolutionizes cosmetic treatments by offering advanced solutions that deliver exceptional results with minimal downtime for patients.

Thesis

InMode Ltd. is an amazingly profitable, well-run leader in the body contouring devices market, one of the fastest growing segments within the broader medical aesthetics industry. While the industry has been suffering from higher interest rates and lower consumer demand in the most recent quarters, InMode is able to leverage its strong balance sheet to continue investing in both R&D and commercial operations to gain market share. This positions the company for a strong recovery once the economic environment improves.

Although it would arguably make sense for InMode to use excess cash to buy back shares at the currently depressed stock price, the fact that management is holding massive liquidity in T-bills earning 5% interest is not a reason not to buy this stock. With a fair value of $31, and a fair value range of $25 to $38, the upside potential significantly outweighs downside risks....

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