Is InMode stock a buy as shares spike 12% after solid preliminary Q3 results?

On Wednesday, InMode Ltd (NASDAQ:INMD) shares spiked more than 12%, extending Tuesday’s gains. As a result, the stock is now up more than 21% this week after announcing better-than-expected preliminary Q3 results.

InMode said it expects fiscal Q3 revenue in the range of $93.5-$94 million, while Street analysts had an average estimate of $87.7 million. Its full-year revenue forecast of $343-$347 million, also came ahead of the consensus analyst expectation of $337.2 million.

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Moreover, InMode expects to post non-GAAP Q3 earnings per share in the range of $0.53-$0.54, compared to the average for analyst expectations of $0.48.

As a result, Street analysts raised their price target for the INMD stock, mirroring Tuesday’s report. Barclays and Canaccord Genuity raised their price target to $85 and $80, respectively from $60, while Baird and UBS, also upped their PT by 27% and 28%, respectively to $80 and $88.

Time to bet on InMode’s exciting growth?

From an investment perspective, InMode shares trade at a steep P/E ratio of 56.50, making the stock less attractive to value investors. 

However, with analysts expecting its earnings per share to grow at an average annual rate of nearly 28% over the next five years, it could be an exciting option for growth investors.

Therefore, InMode’s upbeat Q3 revenue and earnings could trigger a significant bull-run in the stock price.

Technically, InMode shares appear to have recently spiked to complete an upward breakout from a descending channel formation. As a result, the stock has rallied closer to the overbought conditions of the 14-day RSI.

However, with shares yet to retest last month’s higher, investors could target extended gains at about $90.02. On the other hand, $78.40 and $73.12 are crucial support levels.

It’s not too late to buy INMD

In summary, although InMode shares are up more than 21% this week, the stock is yet to retest last month’s highs.

Therefore, given the company’s exciting earnings growth prospects and Tuesday’s bullish preliminary Q3 report, it may not be too late to buy the stock.

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