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- Needham has downgraded InMode Ltd (NASDAQ:INMD) from Buy to Hold with no price target.
- The analyst writes that the 1Q23 aesthetics patient survey indicates that consumers are reducing their spending on procedures.
- The average expected spending over the next 6-12 months was $557, down by 20% from $695 in the 3Q22 survey.
- Additionally, 7.7% of respondents expect a non-invasive body contouring or liposuction procedure in the next 6-12 months, down by 28% from 10.6% in the 3Q22 survey.
- InMode's growth slowed somewhat in 4Q22 from 1Q22-3Q22. It reported Q4 sales of $133.6 million, +21% Y/Y, beating the consensus of $129.14 million.
- The company posted an adjusted EPS of $0.78, surpassing the consensus of $0.67.
- InMode forecasts FY23 adjusted EPS of $2.58-$2.60 vs. $2.64 estimate, with revenues expected to be $525-$530 million compared to the consensus of $522.72 million.
- Management has expressed interest in M&A, and the analyst notes its concern that an acquisition could be a negative catalyst.
- An acquisition is likely to be dilutive to INMD's margins and possibly its EPS. Also, investors could take the cynical view that a deal signals that INMD's core equipment business is slowing.
- Price Action: INMD shares are down 5.87% at $37.36 on the last check Friday.
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