Inogen Hit By Citron Report; Analyst Rebuttal Calls This 'An Excellent Entry Point'

Inogen Inc INGN dropped more than $10 per share Thursday morning as a pair of analysts butted heads over the stock. Citron Research’s Andrew Left published a new report on Inogen in which he said Inogen is facing the prospect of stiff competition and doing so with undifferentiated products.

Citron's Take

Imogen’s business comes from marketing oxygen concentrator devices used for oxygen therapy treatment of patients with respiratory problems.

“While this might sound like a nice but competitive business, the stock market has sucked on nitrous oxide and made this the most expensive company in either med-tech or medical supplies and definitely removed Inogen from any relation to the valuation of its peers,” Left said.

Left pointed out large amounts of insider selling, shortcomings in research and development, lack of a promising pipeline, potential pricing pressures and the fact the company’s business is concentrated in a single product as reasons to sell the stock.

Citron placed a “generous” price target fo $92 on Inogen, implying nearly 50 percent downside.

Needham Fires Back

After Citron’s note came out, Needham analyst Mike Matson stepped in with his own bullish note defending Inogen. Matson said the Citron sell-off is an excellent buying opportunity.

Matson said the majority of Inogen’s insider selling since its IPO has been venture capital investors cashing out He also said Left was comparing Imogen’s valuation multiples to more mature med tech stocks with much lower growth rates. When compared to more appropriate high-growth peers, Matson said Inogen’s valuation is reasonable.

When it comes to R&D spending, he said Inogen’s revenue growth speaks for itself and is an indication the company is getting excellent return on its investment. Matson said the “pushy” sales reps that Left criticized are actually a big part of the company’s direct-to-consumer sales push, one of the strengths of Inogen’s business model.

“We believe a short report has created an excellent entry point for INGN shares,” Matson concluded.

Needham has a Strong Buy rating and $215 price target for Inogen stock.

Left Sticks To His Guns

In an interview with CNBC, Left defended his bearish thesis.

“I’ve made a wonderful living over the past 25 years watching analysts not looking towards the future,” Left said, once again pointing out how Inogen insiders have themselves been selling the stock aggressively.

The stock recovered all of its intra-day losses at time of publication, trading around $171.28.

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