Inspire Medical Grows Like Gangbusters With Innovative Sleep Apnea Treatment
The company reported bullish revenue growth in early May and gave a solid outlook.
Inspire Medical Systems, Inc. (INSP), continues to demonstrate relative strength following another quarter of strong revenue growth reported in early May. Inspire Medical's stock is selected for the IBD 50 Stocks to Watch on Thursday, amidst bullish growth prospects.
The company is the only one to offer FDA-approved neurostimulation for patients with moderate to severe obstructive sleeping apnea. Experts estimate that up to 9% adults in the U.S. suffer from the disorder, but many cases go undiagnosed.
Inspire's minimally-invasive technology opens the patient's airway, by moving the tongue inside the mouth forward so it does not block breathing passages. The device is made up of three main components: A monitor that measures the patient's breathing, a stimulator that moves the tongue, and a wireless remote. This is an outpatient procedure.
The results of the study can lead to a surge in medical spending
The revenue jumped 84%, to $127.9 millions. Inspire increased its revenue forecast for the full year to a range between $580 million and $590 million. This was a slight increase over the previous guidance of $560 to $570 millions. The company's gross margin guidance was 83% to 85%.
Operating expenses for Q1 increased by 69%, to $127.4 Million. This is due to ongoing investments in expanding the U.S. Sales Organization and direct-to patient marketing programs.
After Inspire's first quarter report, several analysts offered positive comments. KeyBanc kept its overweight rating on INSP and increased the price target from 301 to 321. Inspire's price target was also raised by Piper Sandler, UBS and UBS.
Tim Herbert, CEO and President of Inspire Medical Systems said that the growth of the company was mainly due to the increase in utilization of existing sites.
Inspire had 973 Inspire centers at the end of Q1.
Inspire continues to be a compelling story of growth. The company has maintained its target of opening 52-56 U.S. Medical Centers per quarter. The company also targets 12 to 14 new U.S. Territories per quarter until the end of 2023.
The number of funds sponsoring funds has steadily increased in recent quarters.
Inspire's Medical Product Industry Group ranks in the top quarter of IBD’s 197 industry groups rankings. Penumbra, Dexcom, Merit Medical Systems and Stryker are among the top performing stocks within this group.
The Look
Inspire, from a technical standpoint, continues to hold gains after clearing a base of a cup with handle during the week ending May 5. The stock is trading tight, it's holding near the highs and by the end the week could have a pattern that lasts three weeks. It is best to use the pattern to add to a position that already exists.
A better entry would be if Inspire retreated to its 10-week level and found support. INSP would be in an alternative buy zone if it bounced off its 10-week line.