Wall Street analysts aren't always right with their predictions about stocks, but they typically have a strong argument for why they think a given outcome is going to happen. That means it's worth paying attention to what they have to say.
On that note, let's evaluate a couple of growth stocks that Wall Street has high hopes for to see if they might be a good fit for your portfolio. There's no guarantee that they'll rise as much as the analysts are predicting, but both have strong tailwinds that should power their businesses to more growth, even if the forecasts aren't perfect.
Image source: Getty Images.
1. InMode
When it comes to businesses making medical aesthetics treatments that are alternatives to plastic surgeries and face lifts, InMode (INMD -0.06%) is a leader. Its collection of aesthetics workstations have the technology to do everything from skin tightening to fat liquefying, all while being less invasive than surgery. And that's doubtlessly a big part of the reason why it's a company that many investors expect to continue being successful as our image-crazed society becomes even more focused on appearances in the coming years.
On average, Wall Street analysts anticipate that the company's top line will grow to reach $530.3 million in 2023 and then reach $611.1 million in 2024, both of which are substantially higher than 2022's haul of $454.2 million. That growth makes the same analysts predict that its share price will rise this year from where it is now, around $36, to reach above $48, a gain of more than 33%.
To continue growing, InMode will be expanding its sales force in North America in 2023 while also launching two new devices before year's end. It'll also likely experience increasing demand for its consumables like applicator wands and spare parts for its workstations, of which it sold more than 230,000 in the fourth quarter. Moving forward, expect it to announce a major push to expand its operations in the Chinese market, where it has a subsidiary.
So is Wall Street right about this company, and if so, should you buy it? InMode's quarterly net income rose by 486% over the last three years to reach $37.7 million, and it did that by penetrating new markets while developing and launching new products. All signs indicate that's the same strategy it will continue to use for now. So it seems likely that it'll be able to continue succeeding in the next few years.
While there's always a risk that a competitor might be able to develop a better set of devices in the long term, for now, the risk-to-reward ratio looks favorable for growth-oriented investors to buy shares today, and yours truly plans to continue buying more shares over the coming months too.
2. Bionano Genomics
Like InMode, Bionano Genomics (BNGO -4.19%) is another device manufacturer, but its machine called the Saphyr is intended for use in the context of optical genome mapping in biomedical research rather than for more frivolous affairs.
If you don't have any idea of what optical genome mapping is, it's OK. The more important thing to understand is that the company's hardware is a dramatically streamlined way of doing the mapping, which would otherwise take many hours toiling in the laboratory, using a handful of different techniques and analyzer devices in sequence.
So the appeal of the product is that it saves a lot of hands-on time, and it might also be more economical for cash-strapped laboratories too. Plus, the Saphyr is the only product of its kind, as competing genome mapping machines aren't capable of precisely the same type of analysis.
There are a couple of things that are appealing to investors with Bionano, aside from the fact that the Saphyr is a well-differentiated product with no direct competitors in the gene sequencing hardware market. Because researchers need to use the company's software and disposable sample cassettes when they use it, each Saphyr installed implies some recurring revenue down the line.
Likewise, as more researchers make publications using data harvested from their Saphyr, social proof acts as a tailwind for further adoption in the biopharma community. And the company can continue to develop new cassettes and analysis packages to keep growing its base of revenue from existing customers, too.
Wall Street is quite bullish on Bionano as a result of the above; on average, the analysts estimate that it'll bring in as much as $44.6 million for 2023, a big step up from their prediction of $27.6 million for 2022. That could drive its shares to reach as high as $6.10 in a year, a massive run-up from its current level around $1.41. And with its quarterly revenue spiking by 536% in the last three years, reaching $7.2 million, predicting such growth is far from outlandish, as the company is still penetrating its markets for the first time.
But the business still isn't profitable, so it's a bit riskier than InMode if you're considering an investment.
