Inogen, Inc. INGN is well-poised for growth in the coming quarters, backed by its high prospects in the portable oxygen concentrator (POC) space. Solid performance in the second quarter of 2022 and a strong product portfolio also buoy optimism. Headwinds resulting from Medicare and foreign exchange fluctuations are major downsides.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 41.8% compared with the 26.8% fall of the industry and 8.8% decline of the S&P 500.
The renowned provider of POCs has a market capitalization of $645.9 million. The company projects 40.3% growth for 2023 and expects to witness continued improvements in its business. Inogen surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, delivering an earnings surprise of 90.5%, on average.
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Let’s delve deeper.
Solid Prospects in the POC Space: We are optimistic about POCs’ superiority over conventional oxygen therapy (known as the delivery model). POCs provide unlimited oxygen supply anywhere, thereby enhancing patient independence and mobility. Management at Inogen expects this to have an incremental positive impact on its industry and POC adoption.
Product Portfolio: We are optimistic about Inogen’s expanding product portfolio. The company provides oxygen concentrator solutions for portable and stationary use. Notable products offered by the company include Inogen One G5 in the domestic business-to-business and direct-to-consumer channels, besides the Inogen One G3 and One G4 POC. Inogen At Home is aptly formulated for patients who need oxygen therapy during sleep.
Management confirmed Inogen’s plan of incorporating the Tidal Assist Ventilator directly into the Inogen One Portable Oxygen Concentrators and making the SideKick TAV product compatible with the Inogen At-Home Stationary Concentrator.
Strong Q2 Results: Inogen’s robust year-over-year uptick in overall and rental revenues in second-quarter 2022 buoy optimism. Strength in international business-to-business is encouraging. Inogen’s encouraging progress on its new commercial strategy for the prescriber channel raises our optimism. Continued strength across Inogen’s sales capabilities in the direct-to-consumer channel is also promising.
Medicare Headwinds: The Centers for Medicare & Medicaid Services has issued a final rule, which requires Medicare prior authorization for certain durable medical equipment and supplies that the agency characterizes as “frequently subject to unnecessary utilization.” If Inogen’s products are subject to prior authorization, it could reduce the number of patients qualified to come on service using their Medicare benefits, which could delay the start of treatment for such patients and decrease sales productivity.
Forex Woes: Inogen generates a significant portion of its revenues from the international market. Management expects international revenues to remain lumpy owing to the timing and size of the distributor. It also expects adverse foreign currency exchange rates to impede revenue growth in the near term owing to the strengthening of the U.S. dollar against the Euro and other foreign currencies.
Inogen has been witnessing a negative estimate revision trend for 2022. Over the past 90 days, the Zacks Consensus Estimate for its loss per share has widened from $1.58 to $1.91.
The Zacks Consensus Estimate for third-quarter 2022 revenues is pegged at $97.6 million, suggesting a 4.8% improvement from the year-ago reported number.
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.
AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has lost 4.6% compared with the industry’s 32.5% fall in the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has gained 30.4% against the industry’s 26.8% fall over the past year.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 78.3% against the industry’s 10.5% fall over the past year.
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