Inogen's Strategic Shift Seems Prudent, But It Will Take Time To Deliver

 

When I last wrote about Inogen (INGN), I had several concerns about the company – including the risk that the company had saturated its direct-to-consumer upfront purchase market and that its sales force quality had declined. Both of these issues have become more apparent in the time since, and the COVID-19 pandemic only added to the company’s challenges, leading to weak share price performance since that last article.

There’s new management at Inogen and a new strategy in place. I like the new plan, and I think it can drive more sustainable long-term performance, but it’s going to take time to gain traction, and there’s still a lot of work for the company to do. Fortunately, the business still rests on some good foundational drivers – a strong product offering and a strong argument for portable oxygen concentrators (or POCs) to be used more than they are.

I do see worthwhile return potential here, and I do believe that Inogen is undervalued relative to its growth prospects in the coming years. That said, it’s in a growth “twilight zone” now, and the Street is definitely not sold on the new model and/or management’s ability to execute. This is a high-risk call, but one where more aggressive investors could see an outsized return if management can execute.

 

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Inogen's Strategic Shift Seems Prudent, But It Will Take Time To Deliver