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Inogen's Prospects in Europe Solid Amid Trade-Related Tension

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On Mar 18, we issued an updated research report on Inogen, Inc. (INGN - Free Report) . A strong fourth-quarter show and solid prospects in Europe currently favor the stock. On the contrary, trade-related uncertainties plague this Zacks Rank #3 (Hold) company.

What’s Favoring the Stock?

In the recently-reported fourth quarter of 2018, Inogen posted earnings of 44 cents per share, which surpassed the Zacks Consensus Estimate of 25 cents. The bottom line improved from a net loss of 3 cents in the year-ago quarter.

Revenues came in at $86.5 million, which trumped the Zacks Consensus Estimate of $82 million. On a year-over-year basis, the top line climbed 35.7%.

Reflective of this, Inogen retained its revenue and EBITDA outlook for 2019.

Notably, the company continues to expect revenues between $430 million and $440 million, representing 20.1-22.9% growth over 2018.

Full-year adjusted EBITDA is projected between $67 million and $71 million, representing 9.3-15.9% growth year over year.

Moreover, Inogen is optimistic about its prospects in Europe.

In the fourth quarter of 2018, Inogen’s business-to-business unit saw international revenues of $18.5 million, up 54.5% year over year on continued adoption by the company’s European partners. Per management, Europe sales represented 87.8% of fourth-quarter international sales.

Deterrents

Despite a better-than-expected fourth quarter, Inogen trimmed its 2019 net income guidance range to $40-$44 million from the previously-issued $48-$52 million. Per management, the slashed guidance is due to a fall in estimated provision for income taxes related to excess tax benefits recognized from stock-based compensation.

Additionally, the company’s guidance assumes a full impact of the tariffs on applicable Chinese sourced materials since the increase of China import tax has been currently delayed by the United States, giving rise to trade-related uncertainties.

Price Performance

Over the past year, shares of Inogen have declined 23.5% against the industry’s 9.8% gain. The current level is also lower than the S&P 500 index’s 4.3% rally.

Key Picks

A few better-ranked stocks in the broader medical space are Penumbra, Inc. (PEN - Free Report) , Wright Medical Group N.V. and DexCom. Inc. (DXCM - Free Report) . Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Penumbra’s long-term earnings growth rate is expected at 20.9%.

Wright Medical’s long-term earnings growth rate is estimated at 11.3%.

DexCom’s next-quarter earnings per share are projected to grow 120%.

Zacks' Top 10 Stocks for 2019

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