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The Inspire Medical Systems, Inc. (NYSE:INSP) First-Quarter Results Are Out And Analysts Have Published New Forecasts

Shareholders in Inspire Medical Systems, Inc. (NYSE:INSP) had a terrible week, as shares crashed 31% to US$174 in the week since its latest first-quarter results. Revenues of US$164m arrived in line with expectations, although statutory losses per share were US$0.34, an impressive 50% smaller than what broker models predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Inspire Medical Systems

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Taking into account the latest results, the consensus forecast from Inspire Medical Systems' 17 analysts is for revenues of US$787.7m in 2024. This reflects a solid 19% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 41% to US$0.31. Before this earnings announcement, the analysts had been modelling revenues of US$782.1m and losses of US$0.39 per share in 2024. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a considerable decrease in losses per share in particular.

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The average price target held steady at US$251, seeming to indicate that business is performing in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Inspire Medical Systems, with the most bullish analyst valuing it at US$285 and the most bearish at US$187 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Inspire Medical Systems' revenue growth is expected to slow, with the forecast 26% annualised growth rate until the end of 2024 being well below the historical 47% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.1% per year. So it's pretty clear that, while Inspire Medical Systems' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Inspire Medical Systems going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for Inspire Medical Systems that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.