InMode is involved in producing devices used for minimally invasive, plastic surgery using radio-frequency technology. It was growing very rapidly and had strong quarter-over-quarter growth.
Unfortunately, the Covid-19 pandemic hit in February, and the demand for plastic surgery completely collapsed. The stock dropped from a high of over $58 last November to under $14 in March. There has been a steady improvement in the stock since the March low.
Tuesday morning InMode announced that it anticipates record revenues in the third quarter of 2020 of $59.2 million to $59.5 million, versus analyst expectations of just $38.2 million. Earnings are expected to be in the range of $0.60 to $0.62 per share versus analyst expectations of $0.46.
For the year ending 2020, the company's revenue estimate jumps to around $192 million from estimates of $160 million and should produce a substantial jump in EPS.
These numbers substantially surpass the estimates that were in place before the Covid crisis hit, yet the stock is still far from its prior highs.
Before the increase in estimates, EPS was projected to jump 51% in 2021. With a trailing P/E of 26, this results in a PEG ratio of 26/51 which indicates a great value. After the estimate increases Tuesday that ratio should be even better.
The stock has been trending upward for a while and the gap up open Tuesday does make an entry point feel like a chase. My approach to this is to start making some small incremental buys to put the stock on the books and then to look for entry points as it develops.
The strong numbers should help to provide support and when earnings are announced on the morning of Nov. 12, there should not be any ugly surprise. With numbers this strong, I anticipate that INMD may turn out to be the success that I believed it would be back in January.