Inspire Medical (INSP) Beats In Q4
Inspire Medical (INSP) delivered yet another better-than-expected quarter after the closing bell yesterday as Q4 results came in near the high end of management’s pre-announced range. Revenue of $138 million was up 76% and beat expectations of $131 million while GAAP EPS of $0.10 was up from -$0.09 in the year-ago quarter and beat by $0.68. That is a massive EPS beat and it was Inspire’s first quarter of profitability.
Growth continues to be driven by new center additions (61 added in the quarter versus expectations of closer to 56, total centers now at 905) and good utilization per center of 6.2 (i.e. the number of procedures each center carries out). U.S. revenue was $134.3 million (+78%) while European revenue was $3.6 million (+29%) and was impacted by foreign exchange. International expansion continues with procedures already starting in Japan and Singapore while France, Hong Kong and Belgium are slated to start delivering revenue this year and Australia maybe later 2023 or early 2024.
Guidance for 2023 was also ahead of expectations. Management is calling for revenue to grow by 37% to 40% this year ($560 - $570 million) versus expectations of around $550 million. Don’t expect profitability to continue, though if revenue beats pour in there is potential for some quarters to come in close to break-even or better.
Stepping back, Inspire continues to impress and this result should be enough to jump-start the stock and get it moving above the 237 to 263 range where it has been consolidating since the December 13 gap jump (I think it’s time we merge extreme sport terms with technical analysis).
Overnight J.P. Morgan has boosted their price target from 271 to 300 and Piper Sandler has gone from 300 to 305. I expect we’ll get a price target boost from Bank of America (INSP is on the firm’s Best SMID-Cap Ideas of 2023 List) later this morning too. INSP stock closed at 249.6 yesterday.
Officially I will keep INSP at hold; however, if the stock opens around flat to up just a couple of percentage points I wouldn’t argue with anybody that jumps in. I could see the stock making a 5% to 10% move over the next week (maybe more) if the broad market cooperates. HOLD
