INMD - InMode: More Headwinds Than Expected Wait For A Floor To Materialize (Rating Downgrade)

2024-04-27 09:00:00 ET

Summary

• The market remains pessimistic about INMD's prospects, as observed in the stock's decline by -21.6% over the past three months, well underperforming the wider market at +4.7%.
• Part of the headwinds are attributed to the management's lowered FY2024 revenue guidance, building upon the FY2023 slowdown, as borrowing costs are still elevated for prospective buyers.
• Then again, we believe that consumer demand for skin-tightening devices and body contouring products may remain robust, thanks to the popularity of GLP-1 obesity therapies.
• The same has been observed in INMD's growing consumable sales, with it likely to drive intermediate-term growth as equipment sales temporarily stall.
• However, with the stock recording elevated short interest and the market experiencing an uncertain pullback, it may be more prudent to wait for a floor to materialize first.

We previously covered InMode (NASDAQ: INMD ) in January 2024, discussing why we maintained our Buy rating despite the massive plunge over the past three months....

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