Can Reduced Expectations And A New Product Rebuild Inogen's Premium?

Hyper-growth med-tech valuation exists in its own parallel dimension, and it’s a place where I rarely venture with my own money. To that end, I wasn’t excited about the premium the market was giving Inogen (INGN) a year ago and I haven’t seen much reason to write about it since then. In that time, though, the shares shot up more than 75% before starting a fall that has seen the shares lose more than 80% of their value.

I didn’t think the shares deserved to be trading at $160+ back in May of 2018, let alone nearly $290, but I also don’t think the mid-$60’s is fair now. While I’m not crazy about Inogen’s direct-to-consumer model, the reality is that working through home/direct medical equipment vendors isn’t any easier and there’s a definite market for portable oxygen concentrators given the limitations of air tanks. I do believe competitors like Philips (PHG) and ResMed (RMD) constitute a longer-term threat, but I also believe Inogen can lose some market share and still generate long-term revenue growth in the double-digits and high-teens FCF margins. It’s going to take time for Inogen to win back investor interest, but a new product launch and improved rep productivity should drive improved results from here.

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Can Reduced Expectations And A New Product Rebuild Inogen's Premium?