Inspire Medical Systems continues to show relative strength after reporting another strong quarter of revenue growth in early May. Amid bullish growth prospects and strong fund sponsorship, Inspire Medical stock gets the nod for Thursday's IBD 50 Stocks To Watch.
The company offers the only FDA-approved neurostimulation technology for patients suffering from moderate to severe obstructive sleep apnea. It's estimated that the disease affects up to 9% of the adult population in the U.S., but experts say there's a large number of undiagnosed cases.
Inspire's minimally invasive technology opens a patient's airway by moving the tongue forward inside the mouth so that it doesn't block the breathing passages. The device consists of three major components: a monitor that measures breathing, a nerve stimulator that adjusts tongue placement, and a remote. It's an outpatient procedure.
Inspire Medical Surges After Results
Inspire stock surged 7% on May 3 after the company reported a narrower-than-expected loss. Revenue surged 84% to $127.9 million. Inspire upped its full-year revenue guidance to a range of $580 million to $590 million. That was slightly higher than prior guidance of $560 million to $570 million. The company maintained gross-margin guidance of 83% to 85%.
Operating expenses in Q1 jumped 69% to $127.4 million, reflecting ongoing investments in the expansion of the U.S. sales organization and direct-to-patient marketing programs.
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Several analysts chimed in with positive commentary after Inspire's Q1 report. KeyBanc maintained an overweight rating and raised INSP's price target to 321. Inspire also got price-target hikes from Piper Sandler and UBS.
"Our growth was driven primarily by the increased utilization at existing sites and complemented by the addition of 68 new implanting centers and 17 additional U.S. sales territories," said Tim Herbert, president and CEO of Inspire Medical Systems.
At the end of Q1, Inspire operated 973 centers providing Inspire therapy.
Inspire remains a compelling growth story. The company maintained its guidance of opening 52 to 56 U.S. medical centers per quarter. It's also targeting 12 to 14 new U.S. territories per quarter for the remainder of 2023.
Fund sponsorship has been steadily rising in recent quarters, from 551 funds in Q1 last year to 713 funds currently.
Inspire's medical product industry group places in the top quartile of IBD's 197 industry group rankings. Other top-performing stocks in the group include Penumbra, Dexcom, Merit Medical Systems and Stryker.
Technical Look
From a technical perspective, Inspire continues to hold gains well after clearing a cup-with-handle base during the week of May 5. It's trading tightly, holding near highs and could have a three-weeks-tight pattern in place by the end of the week. The pattern is best used to add to an existing position.
But a better entry could come if Inspire pulls back to its 10-week line and finds support. A bounce off the line would put INSP stock in an alternate buy zone.
Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.
