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3 Reasons to Retain Inogen (INGN) Stock in Your Portfolio

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Inogen, Inc. (INGN - Free Report) is well poised for growth in the coming quarters, courtesy of its high prospects in the portable oxygen concentrator (POC) space. Solid performance in the third quarter of 2022 and a strong product portfolio also buoy optimism. Headwinds resulting from stiff competition and foreign exchange fluctuations are major downsides.

Over the past six months, this Zacks Rank #3 (Hold) stock has lost 25.4% against the industry’s 2.8% growth. The S&P 500 declined 2.1% in the said time frame.

The renowned supplier of POCs has a market capitalization of $538.6 million. The company projects 8.5% growth in 2023 revenues and also expects to witness an earnings improvement. Inogen surpassed the Zacks Consensus Estimates in three of the trailing four quarters and missed the same in one, delivering an earnings surprise of 33.9%, on average.

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Let’s delve deeper.

High Prospects in the POC Space: We are optimistic about POCs’ superiority over conventional oxygen therapy (known as the delivery model). POCs provide unlimited oxygen supply anywhere, thereby enhancing patient independence and mobility. Management at Inogen expects this to have an incremental positive impact on its industry and POCs’ adoption.

Product Portfolio: We are optimistic about Inogen’s expanding product portfolio. The company provides oxygen concentrator solutions for portable and stationary use. The company’s notable products include the Inogen One G5 in the domestic business-to-business and direct-to-consumer channels, besides the Inogen One G3 and One G4 POC. Inogen At Home is aptly formulated for patients who need oxygen therapy during sleep. Last month, the company achieved regulatory milestones in the United States and the European Union to support its portable oxygen concentrator products.

Strong Q4 Preliminary Results: Inogen’s robust year-over-year uptick in fourth-quarter 2022 revenues buoys optimism. Management is upbeat about its ability to register revenues within its earlier expectations, despite the prevailing macroeconomic pressures and headwinds resulting from Inogen’s efforts to upgrade the operating disciplines in its direct-to-consumer (DTC) commercial team. The company expects to improve productivity in the near term on the back of its DTC team’s tenure extension and continued partnership with its business-to-business (B2B) channel to manage economic pressures.

Downsides

Stiff Competition: The long-term oxygen therapy (LTOT) market is a highly competitive industry. Inogen competes with a number of POC manufacturers and distributors, as well as providers of other LTOT solutions like home delivery of oxygen tanks or cylinders, stationary concentrators, transfilling concentrators and liquid oxygen. 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 Woes: Inogen generates a significant portion of its revenues from the international market. Management expects international revenues to remain bleak, owing to the timing and size of the distributor.  It also expects adverse foreign currency exchange rates to impede revenue growth in the near term, owing to the strengthening of the U.S. dollar against the euro and other foreign currencies.

Estimate Trend

Inogen has been witnessing a negative estimate revision trend for 2023. Over the past 30 days, the Zacks Consensus Estimate for its loss per share has widened from $1.81 to $1.91.

The Zacks Consensus Estimate for fourth-quarter 2022 revenues is pegged at $88.6 million, indicating a 16% improvement from the year-ago reported number. The Zacks Consensus Estimate for earnings stands at 75 cents per share, implying a year-over-year improvement of 25.7% during the fourth quarter.

Key Picks

Some better-ranked stocks in the broader medical space are McKesson (MCK - Free Report) , AmerisourceBergen and Merit Medical Systems, Inc. (MMSI - Free Report) .

McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.4%. MCK’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed the same twice, the average beat being 3.42%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McKesson has lost 0.7% against the industry’s 3.5% growth in the past six months.

AmerisourceBergen, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.7%. ABC’s earnings surpassed estimates in all the trailing four quarters, the average beat being 3.47%.

AmerisourceBergen has gained 8.7% compared with the industry’s 3.5% growth over the past six months.

Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.35%.

Merit Medical has gained 19% compared with the industry’s 3.5% growth over the past six months.


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