Canaccord cuts InMode stock target to $15, maintains hold rating

Tuesday, Canaccord Genuity adjusted its outlook on InMode Ltd . (NASDAQ:INMD), reducing the price target to $15 from the previous $17 while keeping a Hold rating on the stock. According to InvestingPro data, the stock currently trades at $14.26, with analysis suggesting the company is significantly undervalued based on its Fair Value model. The stock has declined nearly 9% in the past week alone. The revision follows InMode’s first-quarter performance, which, despite surpassing preliminary results and implementing another buyback program, fell short of initial projections. The company confirmed its revenue guidance for 2025, expecting flat to low single-digit year-over-year growth, acknowledging the ongoing economic challenges it faces.

InMode experienced a decline in consumer and provider demand throughout 2024 due to inflationary pressures. Despite these challenges, the company maintains impressive profitability metrics, with InvestingPro data showing an industry-leading gross profit margin of 80.3% and a healthy P/E ratio of 7.1x. The current threats of tariffs and a potentially volatile market have added to the uncertainty for 2025. High interest rates have made it difficult for providers to purchase large capital equipment, a trend that has continued into the first quarter. InMode also reported no increase in consumables sales despite an influx of capital equipment in the market, indicating persistent consumer demand weakness.

The company has observed a shift in its revenue mix, with international sales nearly matching those in the U.S. during the first quarter. This trend is expected to continue, leading InMode to project a 4-5% drop in operating margins for the year. The anticipated 10% U.S. tariffs on products from Israel have prompted InMode to lower its margin and bottom-line forecasts for fiscal year 2025. Although the revenue guidance remains unchanged, the company has cautioned that a revision may be necessary if the second quarter does not show improvement.

InMode’s swift execution of its share buyback program offers a positive note, yet its overall performance is largely influenced by external macroeconomic factors. The firm’s maintenance of its 2025 revenue guidance is seen as increasingly precarious. InvestingPro subscribers can access 8 additional exclusive ProTips and a comprehensive Pro Research Report that provides deeper insights into InMode’s financial health, which currently receives a "GREAT" overall rating despite market challenges. Canaccord has positioned its own revenue expectations for InMode below the company’s guidance, considering the persistent economic headwinds and the pattern of guidance reduction seen in the previous year. The firm awaits greater clarity in the macroeconomic and geopolitical landscape before adopting a more constructive stance on InMode’s prospects.

In other recent news, InMode Ltd. reported its financial results for the fourth quarter of 2024, which showed a shortfall in both earnings and revenue compared to market expectations. The company posted earnings per share of $0.42, missing the forecasted $0.59, and revenue of $97.85 million, below the anticipated $114.23 million. Despite these setbacks, InMode has maintained its full-year 2025 revenue guidance of $395 million to $405 million. Analyst opinions on the company varied, with BTIG downgrading InMode from Buy to Neutral due to concerns over the medical aesthetics market and potential recession impacts. Conversely, Jefferies upgraded the stock from Hold to Buy, though it reduced the price target to $15.00, acknowledging the company’s long-term potential. Canaccord Genuity maintained its Hold rating with a $17 price target, citing challenges in meeting full-year guidance amidst economic headwinds. These developments reflect the mixed sentiment among analysts regarding InMode’s immediate prospects.

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