InMode stock skidded Tuesday as higher interest rates weighed on the aesthetics company's top line.
The company is known for its skin-tightening and fat-obliterating medical devices. But in the fourth quarter, high interest rates kept some doctors from purchasing surgical systems, Needham analyst Mike Matson said in a report.
Further, the number of procedures performed using InMode's devices slowed.
"We maintain our hold rating given the uncertain economic outlook and potential for (mergers and acquisitions) which we worry could dilute InMode's margins," he said.
In midday trades on the stock market today, InMode stock tumbled 8.5% to 24.24. That put shares narrowly above a floor at their 50-day moving average, according to MarketSmith.com.
InMode Stock: Slowdown In Key Divisions
Overall, sales toppled 5% to $126.8 million, coming in a hair above InMode's preannouncement for $126 million to $126.5 million in sales. Analysts expected the low end of that range, according to FactSet. Adjusted earnings fell 9% to 71 cents a share, but topped InMode stock analysts' projections for 66 cents.
Needham's Matson noted the number of installed InMode systems at doctor's offices climbed 7% sequentially. Sales of minimally invasive and noninvasive devices slowed in the fourth quarter with a respective $105 million and $10.1 million.
But sales of hands-free devices improved. Sales fell just 5% compared with a 17% dive in the third quarter.
InMode also launched its ophthalmology system, Envision, in the U.S. in the second quarter. During three quarters of 2023, Envision generated $30 million in sales. InMode is planning to begin a test of Envision in patients with dry eyes in the current quarter. That would put approval in early 2025.
For the year, InMode guided to $495 million to $505 million in sales and adjusted earnings of $2.53 to $2.57 per share. The sales guidance was in line with expectations for $499 million, while the profit outlook beat calls for $2.46, Matson said.
InMode stock has a strong EPS Rating of 92. This means InMode ranks in the top 8% of all stocks when it comes to recent profitability, according to IBD Digital.
But shares have a much lower Relative Strength Rating of 28. This means InMode stock just barely outranks a quarter of all stocks in terms of 12-month performance. Shares hit their peak in late 2021, but have fallen off dramatically since then.
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