Inogen, Inc. INGN is well-poised for growth in the coming quarters, courtesy of high prospects in the portable oxygen concentrator (POC) space. The optimism, led by solid second-quarter 2024 performance and a strong product portfolio, seems justified. However, issues like stiff competition and forex volatility are major downsides.
The Zacks Rank #3 (Hold) company’s shares have risen 45.8% year to date compared with 4.2% growth of the industry. The S&P 500 has increased 25.6% during the same time frame.
The renowned provider of POCs has a market capitalization of $222.5 million. The company projects 61% earnings growth for 2024 and expects to witness continued improvements in its business going forward. Inogen’s P/S ratio of 0.61X compared with the industry’s 2.8X makes its valuation attractive.
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Let us delve deeper.
Huge Prospects in the POC Space: We are optimistic about POCs’ superiority over conventional oxygen therapy (known as the delivery model). Inogen primarily develops, manufactures and markets innovative POCs to provide supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions.
Inogen showed strong prospects in the POC (Portable Oxygen Concentrator) market, driven by a 20% year-over-year business-to-business (B2B) channel growth for the second consecutive quarter during the third quarter. This was due to increasing recognition of the benefits of Inogen's solutions, including quality, ease of servicing and long service life. Per a report by Future Market Insights, the POCs market was valued at $2.2 billion in 2022 and is anticipated to reach $4.3 billion by 2034 at a CAGR of 6.7%.
Product Portfolio: We are optimistic about Inogen’s expanding product portfolio. The company launched the lightest POC in the market, Rove 4, during the third quarter. The device has advanced features such as 840 milliliters of medical-grade oxygen per minute and up to 5 hours and 45 minutes of battery life. Early adoption appears promising, especially for identifying patients earlier in their disease state and enabling potential upgrades in the future. The company believes that Rove 4 will significantly boost the top line in 2025.
Additionally, INGN continues to engage with the FDA on clearance for Simeox, with updates expected upon regulatory approval. The company is developing the device for managing respiratory conditions.
Strong Q3 Results: Inogen’s robust year-over-year uptick in domestic and international business-to-business sales buoys optimism. Solid year-over-year top and bottom-line performances were encouraging. Further, the expansion of the adjusted gross margin bodes well.
On theearnings call management confirmed that it continued to expand its relationships with new and existing customers as patients and providers increasingly recognize the benefits of INGN’s solutions compared to other oxygen therapies. By increasing its scale, efficiency and throughput in the rental channel, Inogen expects to drive higher profitability over time.
The company’s raised revenue outlook for 2024 bodes well. INGN expects revenues in 2024 to be between $329 million and $331 million, reflecting approximately 45% year-over-year growth.
Risks
Seasonality Impact: The fourth quarter is expected to be seasonally weaker, particularly in the DTC channel, with anticipated difficulties in generating leads and increased advertising challenges. Moreover, the DTC channel experienced revenue decline during the third quarter due to operating with a smaller, streamlined sales team, a trend likely to hurt fourth-quarter performance further.
Forex Volatility: The foreign market accounts for a sizeable amount of INGN's income. Management anticipates overseas revenues to continue to be erratic due to the distributor's size and timing. In the near future, INGN also expects unfavorable foreign exchange rates to hinder revenue growth since the U.S. dollar is increasing compared to the euro and other foreign currencies.
Estimate Trend
Inogen has been witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its loss per share has narrowed 9.9% to $173.
The Zacks Consensus Estimate for 2024 revenues is pegged at $329.5 million, suggesting a 4.4% decline from the year-ago reported number.
Inogen, Inc Price
Inogen, Inc price | Inogen, Inc Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and Abbott Laboratories ABT.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 51.2% compared with the industry’s 5.2% growth year to date.
Accuray, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.
ARAY’s shares have lost 31.1% against the industry’s 5.2% growth year to date.
Abbott, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 10% for 2025. It delivered a trailing four-quarter average earnings surprise of 1.64%.
ABT’s shares have risen 2.3% year to date compared with the industry’s 11.5% growth.
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