InMode Stock (INMD Stock): Screaming buy with 90% growth, huge free cash flow & reasonable value?
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- เผยแพร่เมื่อ 16 ม.ค. 2022
- I need your help! Is InMode a screaming buy? I'm having trouble sizing up their long-term potential. They've clearly done extremely well, but how sustainable is it for the future? Amazing financials!
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I think yourself and the market in general is missing one thing here; the sale of their hand pieces will act as a recurring revenue. I spoke to a sales rep and he says a lot of the time what happens in clinics will buy a workstation with one or hand pieces and in future they come back to buy more hand pieces because it is cheaper to buy just the hand piece than a whole new machine. As InMode develops more of these hand pieces threw R&D spend they will be be able to scale revenue very easily and this network of clinic they get their workstations into will deliver recurring revenue.
Point two, currently the aesthetic device marker is ~$11 Billion world wide and InMode has ~2.7% of that market right now. The market in project to grow to ~$30 Billion by 2030. If you think (like I do) InMode can increase it's market share to ~6% over the next 9 years than the stocks at a very minimum a 6 bagger.
Great video. Good point about the one-time sales. In the last two years they have put out new products that have driven growth. I think the runway for sales is long because only 2 years ago they were talking about ramping up sales internationally. And those margins, no debt, lots of cash, no shareholder dilution!!!
I really liked your point about their one time nature of sale. I see INMD as a PTON kind of a stock, which clearly saw a demand of their bikes spike during pandemic, highly inflating their growth figures. After all you need these heavy machines just once.
I would also add that a lot of people have opted for plastic surgery operations as they were working from here, and the economy as a whole was doing better than average (Let's thank the fed for that). I am not sure if these inflated demands will continue moving forward.
I think there is alot of growth in transforming your look. I have been looking at this stock for awhile now, thx for digging in to this company!
We need to know if their products are a one-time sell, or if they have a plan to keep making money from past sales - in the same way that printer companies make money from selling proprietary ink cartridges after the initial printer sale. Or the way that car manufacturers make a big part of their revenue from their service departments after the warranties expire.
My 2nd biggest position :) Great company. With that said, I have the same points as you. The way I see it is the company is in early stages and selling lots of products. Later, those products will need to be either maintened or bought again, which will incur fees. Once you have a big base of customers, it is much easier to sell additional services or even new products. Growth will slow down eventually, but no business can grow so fast indefinitely. What I like is the management performance and focus. I had 200% on this stock, now at +60%. I was also averaging up.
Now do Semler Scientific :) One of my newer positions, smaller, saas and a bit riskier.
How can they add more products with $9M yearly R&D expense?
@@Emre-lm9dk I think Iseral government is heavily subsidizing RD spending of local companies. So you shouldn’t see9 M spend is iseral is the same as in us
No way, the two companies I'm looking into rn are Semler and InMode lol
I’m long INMD so take it as you will but I think what people are missing here is the underlying radio frequency technology that they’ve patented. They are essentially leveraging this technology in each new product for noninvasive procedures. This is how they keep their R&D costs so low and still crank out new products to market. Also, once they get in an office with one product, they continue to upsell with the other products. Essentially bringing Hollywood procedures to the masses and that is only one of their markets they are after.
It sounds a bit like Intuitive Surgical 15 or 20 years ago. ISRG's stock took a 75% haircut in 2008 before going up 40x. ISRG was more medically necessary, though, rather than elective.
Hello Daniel - I am a new subscriber to your channel and an active trader. Thank for drawing my attention to INMD. Yes agreed phenomenal growth figures so far, but also as you pointed out a very tough sales model to / performance to maintain. Re stock buybacks, I just don't think they are in a position to spend any cash reserves to buy back stock and this is not an option right now for them ! As a mainly technical trader, I don't like seeing down days on above average volume which is what I see here. Looking at the long term charts (weekly & monthly) I see some support around 46.00 but beyond that the next level is much lower around 30. So at the moment it goes on a watchlist with some alerts to see if it reaches those longer term support levels. Hope that gives you another perspective on INMD. Best. R.
About 10% of revenue is recurring in nature via services and peripherals. I think the big kicker in this company is continued worldwide growth as you are right you will end up with a saturated market in the USA. Perhaps (guess here) the replacement cycle is something like 5 years which would then lead sustained base growth in the future. Granted being an upfront seller isn't ideal but your current growth rate and product quality is worth investing in. I would think this is the type of business where growth tapers off and doesn't drop off a cliff as you are unlikely to have competitor come in steal market share quickly due to the reputation this company has. So the party is likely to continue for a while still.
Hey Daniel.
I wouldn't necessarily be too worried about the second business 'not thriving'.
Jack Dorsey had something similar going on with Twitter and Square.
On one hand, sure this CEO is running one business that isn't doing great but on the other, he's built one that is thriving. I think that's most important. It proves he is able to run a business well.
The market size of cosmetic surgery was some $50 billion in 2020, and for plastic surgeries we're looking at $20 billion.
I don't think they'll take entire market sectors, but your fear that this market will be satisfied soon seems excessive, considering that their TTM revenue is just $320 million, I don't think they're getting very close to satisfaction yet.
I'll take some closer looks at Inmode, thanks for showing it to us.
But what worries me a bit: What about such over-the-counter devices from $ 300 for personal use, such as the "Silk'n face tite essential"?
Apparently also works with bipolar RF technology. What are the differences to treatment with professional devices such as Inmode
Don't know enough about the industry / TAM and how long they can keep up this growth for enough for me to take a position. Good price to earnings for a growth company though.
Can we get an update on this stock?
They do have recurring revenue ever time the machine does a procedure..the more units they sell. The more recurring revenue. Did you look at the preliminary Q4 earnings.. it was great and they reaffirmed the growth for next year which I am sure they will beat
What is the recurring revenue ?
Their percentage of revenue that is recurring is ~10%. So if the unit sales slow down, 90% of revenue is at risk....
@@Tential1 that will hopefully reverse over time
@@manishchhetri the consumables
I'd like to see your opinion on the value proposition that Progenity is offering.
Looking into syneron has only given me more conviction in Inmode. Look at syneron’s 2006 annual report and look at their revenue growth and profitability then look at how the company did once they left to start a better company. Their sales and marketing expense did start going up a concerning amount in 2006 and 2007 though leading to decreases in profit despite big increases in revenue, but that might’ve been because of the worsening economy. Still synerons financials looked impressive while current Inmode management was there
This is an awesome company with excellent management, execution and vision for future growth.
What's their vision for future growth?
Might be time for a refresher on INMD which is down 37% since this video. Every metric appears that this stock is a real steal at the current price.
Does anyone know if Inmode's Technology is unriavled thanks to existing patents, or could the competition bring similar products to market in the short term?
You have to ask yourself will the aesthetics industry continue to grow? And if so how much? And how much has it grown in the last 5 years? A second and important thing to understand is that currently their margins are very high but it is only a matter of time before the competitors will come in and will bite from their profits.
Could they hit a wall? Potentially. However I don't think that's a great way to think about an investment. Amazon could have hit a brick wall in the early days when they were selling books. They innovated. Any company can hit a brick wall. The fact is they have done the hard work by getting into alot of these medical practices and these companies obviously love the products. They have so many innovative products in the pipeline so these should be an easy cross sell to these customers with minimum marketing costs. The TAM is crazy so if they execute then I don't see why they couldn't keep growing and growing. Insider ownership, a crazy 35%, will also tell you that they are confident in their future. They could have cashed out after the crazy run they were on. I think I would have if the stock I owned almost x 4 in the year like it did. I just can't figure out how they are growing so fast without spending much money. How do they make so many innovative products without huge R&D costs. That does make me scratch my head a little but at the same time I can't fault a company for being operating efficient.
who is here after the crash hoping to find a tiny treasure ? pls review this stock again
It would be great another analysis in this stock. thanks
What do you think? i study this compnay nowadays seems amazing but only crash and crash who knows
The CEO says, 33% of all customers buy within 18 months their next inmode product. So, you can say it's a small part of recurring revenue
This may fall into the consumer discretionary sector but it caters directly to personal vanity which puts it at the front of the proverbial line imo.Long INMD.
Let us know what you decide to do!
How they are growing so fast without spending much money. It is worth doing more findings on whether any potential risk to manipulating its financial results.
Thank you! INMD is my unicorn company!
Well it all depends on the market size
The Ghostbusters quote killed me. 😂
This reminds me of Semler Scientific - same space (medtech), similar multiples (c. 30x earnings), very high margins (90% in SMLR's case). On the face of it, I prefer SMLR due to their subscription-based sales model and SaaS characteristics, but even with SMLR, which has more growth potential, i feel a need a bigger MoS than what the market is currently offering
Wow. The gross margins of SEmler scientific is insane!
But why is growthing slow down so hard? And the earnings are declining?
thank you for this analysis
Brian Feroldi video. They love it.
Having 523M total assets 88M cash with no current debt and just 70M total liability. How they deploy the cash? They not investing much in capex and R&D to grow biz, and never distribute as dividends or buyback shares. Beware of capital allocation and potential value trap.
The time where I discovered that one of INMD product (BodyTite) is used for gynecomastia, I did go long on it !!!
NB: Gynecomastia is the most common male breast disorder. It affects between 50 to 65% of boys and men worldwide
This comment section is much more insightful than others
They spend only $9M /year in R&D. How can they possibly come out with new innovative products?
Mizrahy seems to indicate on the 2021 Q2 earnings call that that figure seems to be in line with their target. Interested as well to see how that plays out...from transcript: "As far as R&D and G&A, it will stay the same. And I don't think we have to measure them percentage-wise. We're spending around $2 million a quarter on R&D. And that's enough in order to maintain the R&D pipeline of at least 2 indication, 2 platforms or 2 product every year. "
@@jalalnanji2090 we are talking about a medical device that is supposed to replace plastic surgery. How can you only spend $9M/year on such a breakthrough ?
Daniel, both co fouders sold most of their stake....
Pricing power - probably no ? Repeat business - no ? Moat- decent - hard to think of it as a long term investment
exposure on the equipment vs exposure on the procedure: $airs
Amazing!
Thank you!
Didn't buy it when this video was released because the price was not attractive enough, now it's down 80% and is actually a great value play!
Watching till the end!
new $ISRG ?
Nothing is a buy right now are you crazy? Everything is going straight down this year but after why but when everything is falling day after day wait for a Confirmation
INMD growth is very slow going forward. Less than 20% CAGR.
INMD can come out with new products and services
Recurring revenue. Device doesn't use high price consumables.
value stock ? no divs, high growth = profitable growth stock ? I did not find the FCF
The p/e ratio that is quoted might be in the 20-30 on the finance websites. But it certainly isn’t…
Why not?
@@muddywaters2k9 $75M in earnings and $3.82B market cap. Trailing p/e is 3.82/0.075 ~= 51. I don’t think forward p/e would be low 20s.
Do be fair who cares about PE? You shouldn't look at PE with a growth company. The PE is for companies who's priority is profit. Inmode's priority is growth.
@@karamsulaiman6605 Projected 2021 EPS is 1.96 according to seeking alpha. Their 2020 EPS was much lower.
Their TTM earnings are almost $150 mil.
That means their current PE is 25.7, as Daniel said, it's in the 20s.
They did $75 mil in 2020, in 2021 they will do much more than that. The actual PE for 2021 could be in the 22-24 area.
Great info, good numbers, gross work. Think I'll pass.
one year later and this stock is still going down and will keep going down for months to come
Cheapest company in the market today that was emotionally tragedia but it's worth at least 55 bucks per share
In terms of a long term investment, this is definitely not the company for me. One time sale companies are dangerous, even with good margins. I like companies that have more predictable revenue like recurring revenue on services, or goods that are repeatedly bought.
Analysts expect little cash flow and earnings for this company... I would love this stock at 30 or less tho.
th-cam.com/video/kUyvv7CSXA0/w-d-xo.html -- Sven's view
Massive share dilution ☹️
They did a stock split. If you account for that shares up less than 3% YoY.
In terms of NTM Market Cap / Free Cash Flow, its at 20.8 closer to it's low of 17 than to it's mean of 29.
However in terms of NTM Total Enterprise Value / EBITDA is at around 17, far from it's low of 3.9 ... it's not super undervalued relative to itself..
I like to make comparisons like this, but to be fair the lows you are quoting were the March 2020 lows which is one of the most severe drops in stock market history in terms of speed.