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 first-quarter 2024 performance and a strong product portfolio, seems justified. However, issues like stiff competition and forex volatility are major downsides.
The Zacks Rank #2 (Buy) company’s shares have risen 106.4% year to date compared with 9.2% growth of the industry. The S&P 500 has increased 17.7% during the same time frame.
The renowned provider of POCs has a market capitalization of $268.7 million. The company projects 56.6% growth for 2024 and expects to witness continued improvements in its business. Inogen’s P/S ratio of 0.8X makes its valuation attractive compared with the industry’s 3.1X.
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Let us delve deeper.
High Prospects in the POC Space: We are optimistic about the POCs’ superiority over conventional oxygen therapy (known as the delivery model). Inogen primarily develops, manufactures and markets innovative POCs to deliver supplemental long-term oxygen therapy (LTOT) to patients suffering from chronic respiratory conditions.
INGN’s proprietary Inogen One and Inogen Rove systems concentrate the air around the patient to offer a source of supplemental oxygen anytime, anywhere, with a battery that can be plugged into an outlet. Per a report by Data Bridge Market Research, the POCs market was valued at $1.58 billion in 2022 and is anticipated to reach $3.03 billion by 2030 at a CAGR of 8.5%.
Product Portfolio: We are optimistic about Inogen’s expanding product portfolio. The company has received the FDA 510(k) clearance for the Inogen Rove 4, which is set to be launched soon. The Rove 4 will offer patients a new flow setting compared to the earlier versions, a service life of up to eight years and highest oxygen production. It is also the lightest POC in the market.
Inogen launched Rove 6 in the U.S. market in July 2023. The Inogen Rove 6 is the first POC with an expected service life of eight years.
Strong Q2 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 the earnings call, management confirmed that targeting hospitals in addition to individual practitioners through its rental business gave earlier access to patients in their care pathway, increasing the duration over which INGN can receive payments. By expanding its scale, efficiency and throughput in the rental channel, Inogen expects to drive higher profitability over time.
The company is also seeing cost benefits in the form of lower sales and marketing expenses on the back of the recent exit of its third-party relationship in the rental channel. These factors raise optimism about the stock.
Risks
Stiff Competition: The LTOT market has intense industrial competition. Inogen faces competition from several POC producers and distributors as well as suppliers of other LTOT services, such as home delivery of oxygen cylinders or tanks. Given the relatively straightforward regulatory path in the oxygen therapy device manufacturing market, Inogen expects the industry to become increasingly competitive in the future.
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 relative to the euro and other foreign currencies.
Estimate Trend
Inogen has been witnessing an improving estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its loss per share has narrowed 11.4% to $1.95.
The Zacks Consensus Estimate for 2024 revenues is pegged at $327 million, suggesting a 3.6% decline from the year-ago reported number.
Inogen, Inc Price
Inogen, Inc Price
Inogen, Inc price | Inogen, Inc Quote
Key Picks
Some other top-ranked stocks in the broader medical space are Boston Scientific BSX, AxoGen AXGN and SiBone SIBN, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s shares have risen 58.4% in the past year. Estimates for the company’s earnings per share have remained constant at $2.40 for 2024 and $2.71 for 2025 in the past 30 days. BSX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 7.2%. In the last reported quarter, it posted an earnings surprise of 6.9%.
Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 145% in the past year compared with the industry’s growth of 15.5%. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Estimates for SiBone’s 2024 loss per share have remained constant at 89 cents in the past 30 days. Shares of the company have lost 30.4% in the past year against the industry’s 15.5% growth. SIBN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.4%. In the last reported quarter, it delivered an earnings surprise of 15.4%.
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