Consider This Healthcare Stock to Improve Your Portfolio

INMD looks undervalued after dropping over 60% year-to-date

Jun 1, 2022 at 9:50 AM

INMD

InMode Ltd (NASDAQ:INMD) is a global provider of medical technologies. INMD manufactures and markets platforms that harness novel radio-frequency based technology for both the patients and the practitioners with a goal of enabling new emerging surgical procedures as well as improve existing treatments. Last week, InMode announced that their Chief Executive Officer and Chief Financial Officer will participate at the UBS Healthcare One-on-One Virtual Day, which is scheduled for today, June 1.

The stock was last seen up 0.7% at $27.00, though it still sits dangerously close to its May 11 annual low of $20.60. The stock has been struggling with pressure at the 40-day moving average, too, which has kept it at a 62% year-to-date deficit.

Analysts remain bullish. All three in coverage call INMD a "buy" or better, while the 12-month consensus price target of $55 is more than double last night's close.

Meanwhile, short sellers have been piling on. Short interest rose 26.9% in the last two reporting periods, and now makes up a hefty 11.1% of the stock's available float.

The medical technology company continues to offer a very attractive valuation at a market cap of $2.20 billion and a forward price-earnings ratio of 11.16. Although InMode stock also trades at a price-sales ratio of 5.32, it remains undervalued due to the business’ strong profit-margins and high sales growth. For fiscal 2021, InMode reported a 73% increase in revenues and a 120% increase in net income. The healthcare company has also managed to grow their yearly revenues and net income 277% and 657%, respectively, since fiscal 2018.

InMode is estimated to end fiscal 2022 with an 18.2% increase in revenues and a 1.5% increase in earnings. INMD is also expected to grow its revenues and earnings 14.7% and 13%, respectively, for fiscal 2023. In addition, the medical technology business holds an excellent balance sheet with $399.46 million in cash and just $3.08 million in total debt, making InMode stock a relatively safe pick for value and growth investors.

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