September 21, 2022

InMode looks set to soar

 How cheap is InMode stock right now? The stock has a price-to-sales ratio of 7, and a price-to-earnings ratio of 16. A year ago, those multiples were 23 and 53, respectively. When we emerge from this bear market, the multiples of growth stocks will expand back to norms, and I expect the market will again pay a premium for InMode's amazing numbers. 


InMode has introduced radio frequency (RF) devices to the world of cosmetic surgery. These procedures are noninvasive, like lasers, except they have applications to the entire spectrum of "body contouring." (Lasers are largely limited to superficial tasks like hair removal.) InMode's devices direct RF waves into the body. For its "body contouring services," InMode says the "treatments use radiofrequency energy to coagulate fat, tone muscles, remodel skin and address cellulite and imperfections such as vascular lesions, spider veins, port wine stains, and leg veins." The upshot is that InMode's devices open the door to noninvasive body sculpting without the dangers of surgery.   

This tech breakthrough has made InMode highly profitable, with a 42% profit margin. And the company is still growing fast, with sales soaring 30% in its most recent quarter.What's beautiful about this business is that InMode has over 14,000 installed devices around the world and every device is a platform creating continuing revenue streams for the company as the device is used. In the most recent quarter, InMode reported $15 million in revenue from consumables and service, a 59% year-over-year jump. While that's a small portion of the $113 million in total revenue, the number will grow.

The noninvasive aesthetic market was valued at $53 billion last year and InMode management is optimistic about the opportunity to convert those using lasers to its RF machines. InMode is already on the way to becoming the dominant medical device maker in cosmetic surgery. The shares are dramatically on sale now, even though the company has seen nothing but good news. Over the next several years, I expect the stock to surpass its highs and go a lot higher. At $33, this stock is a steal right now.


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