Inogen (INGN) Now a Strong Buy on Positive 2015 Outlook - Analyst Blog

On Dec 18, 2014, Zacks Investment Research upgraded home care oxygen therapy provider Inogen Inc. (INGN) to a Zacks Rank #1 (Strong Buy). We believe that a positive 2015 outlook primarily drove the upgrade.

Why the Upgrade?

For 2015, total revenue is expected in the range of $130–$135 million, representing 20%–25% growth over the 2014 guidance mid-point of $108 million.

We believe that Inogen's expanding product portfolio and growing patent base are key catalysts. Inogen's unique direct-to-customer (DTC) business model has provided it a leading position in the oxygen therapy market.

Inogen expects DTC sales to grow more than 30% year over year. Domestic B2B sales and DTC rentals are expected to grow at a pace of more than 20% year over year. Meanwhile, the international segment is expected to grow over 5% year over year.

Going forward, Inogen sees multiple avenues to drive growth in 2015, including the expansion of its DTC network and an increase in the B2B distribution, both domestic and international. New products such as Inogen At Home, which was launched in Oct 2014, along with Inogen One G4 are expected to drive further growth.

Inogen projects 2015 adjusted EBITDA in the band of $27–$30 million while adjusted net income is projected in the range of $8–$9.5 million. The company expects positive cash flow for the year with no additional equity capital required to meet its current plan.

The company's portable oxygen concentrators (POC) segment is the fastest growing one in the market as compared with stationary and ambulatory therapies. We believe that this will boost Inogen's competitive position against the likes of Invacare (IVC) and Koninklijke Philips (PHG).  

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2014 jumped 15.4% (4 cents) to 30 cents per share over the last 60 days. Similarly, for fiscal 2015, the Zacks Consensus Estimate increased almost 8% (3 cents) to 41 cents per share over the same time frame.

Stock to Consider

One may also consider Synergetics USA (SURG), which carries the same Zacks Rank as Inogen.