InMode Faces Revenue Headwinds Amid Challenging Economics: Analyst Cuts Price Target And Estimates

Canaccord Genuity analyst Caitlin Cronin downgraded InMode Ltd INMD to Hold from Buy at a lowered price target of $22 from $55. 

Yesterday, the company reported Q3 preliminary results and a lowered FY23 outlook. 

The company expects Q3 revenue of $122.8 million-$123.0 million (vs. consensus of $136.94 million) and adjusted EPS of $0.59-$0.60 (vs. $0.66 street view). 

For FY23, INMD lowered revenue guidance to $500 million-$510 million from $530 million-$540 million, vs. consensus of $538.03 million). 

The analyst is unsurprised by this result and believes tough comparables (on stronger Q3 FY22) and sentiment across MedTech suggesting Q3 returning to more normal seasonality acted as a headwind. 

At a recent conference, INMD stated that the financing pressures are impacting provider ROI on systems and highlighted challenges to providers securing financing, says the analyst.  

Cronin doesn't see these economic headwinds as a near-term story but rather as the beginning of a more subdued appetite for new capital, curbing potential consumable sales.

Although the analyst cites GLP-1-induced skin tightening and expansion into health & wellness as driving patient demand, concerns about worsening provider economics for capital equipment sales can negate the impact of these positives.

Consequently, Cronin lowered estimates for revenue and adjusted EPS to $506.7 million (from $540.8 million), $2.55 (from $2.70) for FY23, and $550.8 million (from $622.6 million), $2.66 (from $3.00) for FY24. 

Price Action: INMD shares are down 6.65% at $20.91 on the last check Friday.