INSP: Medicare Reimbursement Upside Will Offset Ongoing Execution And Competitive Risks

Analysts have raised their fair value estimate for Inspire Medical Systems by about $10 to roughly $128 per share, citing positive surprises in Medicare and commercial reimbursement that are expected to support higher pricing, stronger long term growth, and justify a higher earnings multiple.

Analyst Commentary

Recent Street research reflects a notable shift in sentiment toward Inspire Medical Systems, with several bullish analysts highlighting the impact of unexpectedly favorable reimbursement decisions and the company’s improving execution, while more cautious voices focus on operational headwinds and valuation risk.

Bullish Takeaways

• Bullish analysts see the surprise Medicare and outpatient reimbursement increases as structurally lifting average selling prices and unit economics, supporting higher long term revenue growth assumptions and justifying richer revenue based valuation multiples.
• Upgrades and higher price targets are being driven by greater confidence in 2026 to 2027 estimates, as better reimbursement is expected to improve provider incentives, accelerate hypoglossal nerve stimulation procedure volumes, and de risk future guidance.
• Some research notes point to easing headwinds around patient flow and marketing, with stepped up advertising and patient warehousing now expected to translate into stronger volume growth in 2026, improving operating leverage over time.
• Bullish analysts also argue that near term volatility has created an attractive entry point for a differentiated small and mid cap medtech name, contending that paying a premium multiple on estimated 2026 revenue is reasonable given the company’s growth profile and potential strategic interest.

Bearish Takeaways

• Bearish analysts highlight lingering downside risks to near term sales growth and earnings, citing capacity utilization bottlenecks, implementation issues around new initiatives, and the need for higher operating expenses to resolve physician and workflow challenges.
• Some caution that sentiment remains fragile following reduced 2025 revenue guidance, with expectations for only low double digit growth and another transition year as the company works through product ramp and execution issues.
• There is concern that GLP 1 weight loss therapies and emerging competitive therapies could pressure procedure volumes and dampen the longer term growth algorithm, especially if reimbursement momentum slows.
• A subset of bearish analysts has lowered price targets to reflect execution risk and uncertainty around the durability of recent reimbursement gains, warning that any disappointment versus elevated 2026 expectations could drive renewed multiple compression.

What's in the News

• Grant & Eisenhofer P.A. filed a securities class action in the U.S. District Court for the District of Minnesota alleging Inspire Medical and senior executives misled investors about the Inspire V launch, market demand, launch readiness, and reimbursement timing, after the company cut 2025 earnings guidance by more than 80% and the stock fell about 32% in one day (class action filing).
• Inspire Medical completed a share repurchase tranche, buying back 552,423 shares, or about 1.87% of shares, for $90.49 million under its previously announced buyback program (company disclosure).
• The company raised its 2025 diluted EPS guidance to a range of $0.90 to $1.00, up from prior guidance of $0.40 to $0.50, while maintaining 2025 revenue guidance of $900 million to $910 million, which the company stated implies 12% to 13% growth over 2024 (company guidance update).
• New clinical and limited market release data for Inspire V from Singapore and 10 leading U.S. centers showed shorter surgical times, strong safety, high therapy adherence, and superior outcomes to Inspire IV, supporting the company’s plans for broader commercialization (clinical and conference data release).
• Nyxoah filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware alleging Inspire IV and Inspire V infringe three Nyxoah patents and seeking injunctive relief and damages (patent litigation filing).

Valuation Changes

• Fair Value Estimate has risen modestly from about $118 per share to about $128 per share. This reflects higher confidence in future earnings and reimbursement durability.
• Discount Rate has decreased slightly from approximately 7.72% to approximately 7.69%. This indicates a marginally lower perceived risk profile in the cash flow outlook.
• Revenue Growth assumption is essentially unchanged at roughly 11.4% annually. This suggests no material shift in long term top line growth expectations.
• Net Profit Margin forecast remains effectively flat at around 7.6%. This implies stable expectations for long term profitability.
• Future P/E multiple has increased from about 42.5x to about 46.3x. This signals a somewhat richer valuation being applied to projected earnings.