BOSTON (Reuters) – Prominent brief seller Carson Block is saying that medical device company Inogen Inc has inflated the dimensions of its markets and expects the inventory worth to fall.
FILE PHOTO – Carson Block, Chief Investment Officer, Muddy Waters Capital LLC., speaks on the Sohn Investment Conference in New York City, U.S. May four, 2016. REUTERS/Brendan McDermid
Block, whose analysis agency Muddy Waters is greatest recognized for concentrating on the shares of China-based corporations, has written a brand new report that asserts that Inogen’s administration has made overly optimistic progress forecasts.
The company’s inventory fell 6.2 % Friday morning to $131.07. It had climbed steadily to as excessive as $282.92 in September.
Calls to the company’s media relations and investor relations departments looking for remark weren’t returned.
Muddy Waters is brief Inogen Inc as a result of it query’s Inogen’s statements about complete addressable market (TAM) measurement and potential progress, the report seen by Reuters stated.
Inogen has a market capitalization of $three billion and makes light-weight moveable oxygen concentrators that free its customers from being tethered to heavy tanks.
While the company has stated the U.S. TAM is roughly three million customers and is rising at 7 % to 10 % a yr, Block stated the actual U.S. TAM is way smaller at about 1.three million, citing Centers for Medicare & Medicaid Services (CMS) knowledge. He additionally stated CMS knowledge exhibits that the oxygen remedy market has been shrinking. He wrote that Inogen based mostly its estimates on knowledge from Wintergreen Research.
“The key to INGN’s extreme multiple is its blue sky story,” the report stated.
Block sees extra room for it to fall, arguing that “INGN will hit peak sales as soon as this year, and likely no later than next.” Block wrote within the report “At our forecast of peak earnings, we worth INGN at $46 per share, a 67 % lower
from its present worth.”
Block ranks among the many business’s most intently adopted short-sellers, who search to generate income when a inventory worth falls. Some sometimes publish analysis studies detailing what they think about to be incorrect with a company.
Dedicated short-sellers like Block, whose fund oversees roughly $210 million, are likely to handle small quantities of cash and sometimes face uphill battles when the inventory market is zooming larger.
Last yr when Block revealed three studies, together with one on Chinese tutoring company TAL Education Group, his fund earned 20 % after charges. The Standard & Poor’s 500 index fell four.four % and the activist buyers on common misplaced 11.25 %.
Block, who educated as a lawyer however began his profession as an fairness analyst, distributed his analysis without spending a dime for years and stated it took him years to create his hedge fund, which was launched in 2016.
Reporting by Svea Herbst-Bayliss; Editing by Steve Orlofsky