On Dec 11, we issued an updated research report on leading medical devices company Inogen Inc. INGN. The stock carries a Zacks Rank #3 (Hold).

Inogen's price movement over the past six months has been favourable. The company represented a return of almost 33.4%, better than the industry's rally of 5.2%. The current level is also higher than the S&P 500’s return of 9.3% over the same time frame.

Inogen’s expanding product portfolio is a key catalyst. The company provides oxygen-concentrator solutions for portable and stationary use. Inogen’s flagship product — One G4 — is a single-solution portable oxygen concentrator (POC).

Further, Inogen One G3 POC provides mobility and independence to oxygen therapy users. This platform is the lightest continuous flow oxygen concentrator in the market and consumes less power than competitive devices.

Solid business-to-business sales performance is another reason for the stock's solid performance. Notably, Inogen has a market cap of $2.47 billion. The company’s direct-to-customer business model has lent it a leading position in the oxygen therapy market. The direct-to-consumer model provides companies an opportunity to build a unique brand relationship directly with customers. In an effort to drive growth in the direct-to-consumer business, the company announced that it has secured an additional facility in Cleveland, OH.

Inogen, Inc Price

Inogen, Inc Price | Inogen, Inc Quote

On the flip side, foreign exchange headwinds are a concern. Inogen generates a significant portion of revenues from the International market. Management expects international revenues to be lumpy, thanks to the timing and size of the distributor.  Adverse foreign currency exchange rates are likely to impede revenue growth in the near term due to the strengthening of the U.S. dollar against the Euro and other foreign currencies.

In the Long-term Oxygen Therapy (LTOT) market, POC adoption continues to witness significant challenges. This is primarily due to the lack of awareness among consumers about the benefits of POC devices, higher upfront cost compared with traditional delivery model and reluctance of home equipment medical providers to support POC adoption.

We believe that lack of awareness ensures higher cost related to sales & marketing that can mar profits. We believe that these headwinds related to POC adoption are major concerns that can hurt Inogen’s prospects in the long haul.

Key Picks

A few better-ranked medical stocks are athenahealth, Inc. ATHN, Align Technology, Inc. ALGN and Myriad Genetics, Inc. MYGN.

Notably, athenahealth, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

athenahealth has a long-term expected earnings growth rate of 22.3%.

Align Technology has a long-term expected earnings growth rate of 28.9%.

Myriad Genetics has a long-term expected earnings growth rate of 15%.

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