Here's Why You Should Retain Inspire Medical (INSP) Stock Now
Inspire Medical Systems, Inc. INSP is well-poised for growth in the coming quarters, courtesy of its focus on research and development (R&D). The optimism led by a solid second-quarter 2023 performance and a few regulatory approvals are expected to contribute further. However, concerns regarding overdependence on the Inspire system and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 6.1% against the industry’s 32.1% decline. The S&P 500 has witnessed 19.2% growth in the said time frame.
The renowned medical technology company focused on obstructive sleep apnea (OSA) has a market capitalization of $5.43 billion. The company projects 74.4% growth for 2024 and expects to maintain its strong performance. Inspire Medical has delivered an earnings surprise of 45.6% for the past four quarters, on average.
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Let’s delve deeper.
Focus on R&D: Inspire Medical’s foundational commitment to driving innovation and improving patient lives fuels its continuous product development, raising our optimism. Per management, the company intends to invest in existing and next-generation technologies to further improve its products and clinical outcomes, optimize patient acceptance and comfort and broaden the patient population that can benefit from Inspire therapy. Recent examples of Inspire Medical’s product innovation include the next generation of the Inspire neurostimulator, which is in development, and an active project to improve the physician programmer.
Regulatory Approvals: We are upbeat about Inspire Medical’s receipt of a slew of FDA approvals over the past few months. In June 2023, Inspire Medical submitted a premarket approval supplement to the FDA for its next-generation Inspire system. Also, in June 2023, it received approval from the FDA on an expanded indication, which includes an increase on the upper limit of the Apnea Hypopnea Index to 100 events per hour from 65, and raises the Body Mass Index warning in the labeling to 40 from 32.
Strong Q2 Results: Inspire Medical’s solid second-quarter 2023 results buoy our optimism. The company recorded a robust improvement in the top line and strength in year-over-year geographic results. Activation of new U.S. centers and the creation of new U.S. sales territories were also recorded during the reported quarter.
Downsides
Overdependence on Inspire System: Sales of Inspire Medical’s Inspire system accounted for primarily all its revenues for the past few years. The company’s ability to execute its growth strategy and become profitable will, therefore, depend upon the adoption of the Inspire therapy to treat moderate-to-severe OSA in patients who are unable to use or get consistent benefits from continuous positive airway pressure. Management cannot ensure that the company’s Inspire therapy will achieve or maintain broad market acceptance among physicians and patients.
Stiff Competition: The medical technology industry is highly competitive, subject to change and significantly affected by new product introductions and other activities of industry participants. Inspire Medical’s competitors have historically dedicated and will continue to dedicate significant resources to promote their products or develop new products or methods to treat moderate to severe OSA.
Estimate Trend
Inspire Medical has been witnessing a negative estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its loss per share has widened from $1.18 to $1.76.
The Zacks Consensus Estimate for the company’s third-quarter 2023 revenues is pegged at $155.2 million, suggesting a 42.2% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, McKesson Corporation MCK and Integer Holdings Corporation ITGR.
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average surprise of 21.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has gained 19.1% against the industry’s 0.4% decline over the past year.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, with an average of 8.1%.
McKesson has gained 30.7% compared with the industry’s 22.5% rise over the past year.
Integer Holdings, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Integer Holdings has gained 28.5% compared with the industry’s 4.2% rise over the past year.
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DaVita Inc. (DVA) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report
