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Shareholders in InMode Ltd. (NASDAQ:INMD) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
After the upgrade, the three analysts covering InMode are now predicting revenues of US$183m in 2020. If met, this would reflect a meaningful 15% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to fall 17% to US$1.26 in the same period. Previously, the analysts had been modelling revenues of US$171m and earnings per share (EPS) of US$1.04 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for InMode 6.3% to US$51.00 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic InMode analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$47.00. This is a very narrow spread of estimates, implying either that InMode is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that InMode's revenue growth will slow down substantially, with revenues next year expected to grow 15%, compared to a historical growth rate of 28% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.8% next year. Even after the forecast slowdown in growth, it seems obvious that InMode is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at InMode.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for InMode going out to 2023, and you can see them free on our platform here..
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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