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MIAMI - DOMA Perpetual Capital Management LLC, a significant shareholder of InMode Ltd. (NYSE:INMD), today sent a letter to the company’s board urging a return of capital to shareholders through stock buybacks. According to InvestingPro data, InMode maintains strong financial health with a 9.6x current ratio and virtually no debt, supporting DOMA’s position on capital return potential.
The investment firm is advocating for a 10% share repurchase in Q4 2025 followed by another 10% buyback in Q1 2026, according to the letter published Tuesday.
DOMA argues that InMode’s current cash position of approximately $510 million represents 53% of the company’s market capitalization, with no debt, while generating more than 10% of its market value in cash annually despite lower sales.
"The Board has a legal and fiduciary duty to act in the best interest of shareholders, returning that money to its owners in the most accretive way possible," wrote Pedro Escudero, CEO of DOMA Perpetual Capital Management.
The letter contends that after subtracting the cash position, InMode is trading at roughly three times future free cash flow and earnings, representing what DOMA calls an "extremely depressed valuation" and "tremendous opportunity" to return money to shareholders. This assessment aligns with InvestingPro’s analysis, which indicates the stock is currently trading below its Fair Value, with a P/E ratio of just 6x and strong overall financial health score.
DOMA also criticized InMode’s management for "chaotic leadership" and "consistent damaging comments regarding capital allocation," including CEO Moshe Mizrahy’s assertion that previous buybacks haven’t benefited shareholders.
The investment firm addressed several arguments against buybacks, stating that tax implications have been overstated and that buybacks should be evaluated based on the company’s future value potential rather than as a tool to immediately boost stock prices.
According to the letter, DOMA believes the "window of opportunity" for advantageous share repurchases may close within the next 6-9 months as interest rates are expected to decline.
The information in this article is based on a press release statement from DOMA Perpetual Capital Management.
In other recent news, InMode Ltd. has reported preliminary second-quarter revenue figures that fell short of analyst expectations. The company anticipates Q2 revenue to be between $95.4 million and $95.5 million, which indicates a 10.5% growth compared to the previous year. However, this figure does not meet the consensus estimate of $99.2 million, nor does it align with BTIG’s projection of $100 million. Adjusting for unrecognized revenue from the previous year, the growth rate would actually be a negative 7.0% year-over-year. In light of these developments, InMode has also revised its full-year guidance downward. Meanwhile, BTIG has maintained its Neutral rating on InMode’s stock. These updates reflect the company’s recent financial performance and analyst perspectives.
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