Competitor Exit A Boom For Respiratory Device-Focused Inogen, Earns Analyst Upgrade

In January,  Koninklijke Philips NV PHG announced that it would stop selling new CPAP or BiPAP sleep therapy devices or other respiratory care devices in the U.S. until the consent decree’s requirements are met.

Internationally, Philips Respironics will maintain its provision of new sleep and respiratory care devices, along with associated accessories, consumables, replacement parts, and services, subject to specific conditions. 

William Blair writes that Inogen Inc INGN has a significant opportunity to regain a substantial portion of the forfeited market share. 

The analysis suggests that Respironics was the second-largest player in the market, with an estimated 15%-25% share. William Blair expects Inogen to have roughly a 50% share in the market compared to Respironics.

In a pessimistic scenario, this departure could counteract potential challenges faced by Inogen due to recent execution issues or worsening macroeconomic conditions. 

On the other hand, in an optimistic scenario, Respironics’ exit presents a substantial opportunity for Inogen to enhance its financial performance and secure a stronger position in the market.

Despite recent changes in strategy and management, including the appointment of a new CEO and CFO in recent months, the company’s stability in fundamentals and commercial organization remains uncertain, the analyst writes. 

However, given the current valuation, the risk/reward balance is perceived as favorable. Hence, William Blair upgraded Inogen from Market Perform to Outperform.

The upgrade is based on the potential for capturing new shares, a valuation disconnect compared to the lowest quartile of peers, and the company’s sufficient capital for at least two years, which could bridge it to financing or profitability.

Price Action: INGN shares are up 22.9% at $10.46 on the last check Thursday.