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 fourth-quarter 2023 performance and its global presence are expected to contribute further. However, concerns regarding overdependence on the Inspire system and reliance on third parties persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 21.2% compared with the 13.9% decline of the industry. The S&P 500 has witnessed 29.4% growth in the said time frame.
The renowned medical technology company focused on obstructive sleep apnea (OSA) has a market capitalization of $5.70 billion. The company projects 47.2% growth for 2024 and expects to maintain its strong performance. Inspire Medical has delivered an earnings surprise of 353.6% 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.
Global Presence: Inspire Medical’s management is currently planning to continue to expand the size and geographic scope of the company’s direct sales organization to generate future revenue growth. This looks promising for the stock.
During 2023, Inspire Medical activated 280 U.S. centers bringing the total to 1,180 U.S. medical centers implanting Inspire therapy as of Dec 31, 2023. It also created 62 new U.S. sales territories during 2023, bringing the total to 287 U.S. territories as of Dec 31, 2023.
Strong Q4 Results: Inspire Medical’s solid fourth-quarter 2023 results buoy our optimism. The company recorded a robust improvement in the top and bottom lines. Strength in year-over-year U.S. revenues was seen. The gross margin expansion, despite rising product costs, was also witnessed.
Downsides
Overdependence on Inspire System: Sales of Inspire Medical’s Inspire system accounted for primarily all its revenues for the past few years. Its ability to execute its growth strategy and become profitable will, therefore, depend upon the adoption of 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.
Reliance on Third Parties: Inspire Medical relies on third-party suppliers and contract manufacturers for the raw materials and components used in its Inspire system and to manufacture and assemble its products. The suppliers that provide certain materials and components are sole suppliers. These sole suppliers, and any of Inspire Medical’s other suppliers or third-party contract manufacturers, may be unwilling or unable to supply the necessary materials and components or manufacture and assemble its products reliably and at the levels anticipated or required by the market.
Estimate Trend
Inspire Medical has been witnessing a positive estimate revision trend for 2024. In the past 90 days, the Zacks Consensus Estimate for its loss per share has narrowed from 70 cents to 38 cents.
The Zacks Consensus Estimate for the company’s first-quarter 2024 revenues is pegged at $161.3 million, suggesting a 26.1% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, Cardinal Health, Inc. CAH and Cencora, Inc. COR.
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 75.2% compared with the industry’s 23.8% rise in the past year.
Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 55.5% compared with the industry’s 15.6% rise in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 54.8% compared with the industry’s 6.1% rise in the past year.
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DaVita Inc. (DVA) : Free Stock Analysis Report
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Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report
