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Shares of medical-device company InMode (INMD -0.81%) dropped on Wednesday after the company reported preliminary results for its upcoming fourth quarter. It also gave guidance for 2023. Both of these numbers looked good, but the stock was down nearly 10% Wednesday nonetheless.
On Oct. 27, 2022, InMode gave full-year 2022 revenue guidance of $445 million to $450 million, implying revenue of $124.3 million to $129.3 million in Q4. Today, InMode reported preliminary Q4 revenue of $133.2 million to $133.4 million, exceeding previous guidance.
Considering InMode expects to beat its previous guidance, it’s surprising to see the 10% drop today. The company sells medical devices used often in cosmetic procedures and later sells consumable products as procedures are performed.
In this way the business model is similar to Intuitive Surgical‘s. Intuitive Surgical stock is down today because it reported preliminary financial results as well. But for Intuitive Surgical, the numbers fell short of Wall Street’s expectations.
Perhaps InMode stock is down in tandem with Intuitive Surgical. But admittedly, InMode’s drop is a head-scratcher considering its strong numbers.
Some investors have questioned InMode’s prospects for 2023 because many economists expect a recession in the coming year. However, the company’s outlook is surprisingly robust. Management expects full-year 2023 revenue of $525 million to $530 million. For perspective, with its Q4 beat, it expects to report full-year 2022 revenue of about $454 million. Therefore, 2023 guidance implies about 16% year-over-year growth.
That’s InMode’s slowest growth rate in a while and might explain today’s drop. That said, 16% growth is nothing to sneeze at. And trading at just 16 times trailing earnings, this looks like a value stock investors should strongly consider right now.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends InMode and Intuitive Surgical. The Motley Fool has a disclosure policy.
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