Inspire Medical Systems, Inc. (INSP): A Bull Case Theory

We came across a bullish thesis on Inspire Medical Systems, Inc. on Business Invest’s Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on INSP. Inspire Medical Systems, Inc.’s share was trading at $92.46 as of January 13th. INSP’s trailing and forward P/E were 63.33 and 62.50, respectively according to Yahoo Finance.

Inspire Medical Systems (INSP) is a specialized player in the health care equipment sector, focused on treating obstructive sleep apnea, a condition where patients repeatedly stop breathing during sleep. Its flagship product, the Inspire implantable system, stimulates critical airway muscles to keep breathing passages open, offering an effective alternative for patients unable to tolerate traditional CPAP machines.

The company has carved out a highly defensible niche, reflected in its robust financial performance, with a three-year revenue CAGR of 36.3%, gross margins of 84.9%, and a free cash flow margin of 11.2%. Debt levels are minimal, and interest coverage is exceptionally strong at 992x, demonstrating significant financial resilience. Despite this strong growth, the company faces valuation pressures, as reverse DCF analysis suggests that sustaining a 15% annual return would require revenue growth of approximately 28% per year.

While the business shows minimal dilution and stabilizing profit margins around 11%, a more conservative growth scenario of 15% CAGR over the next five years implies downside risk, with an ideal entry point near $81, representing a potential 40% discount from current levels.

The investment case for INSP hinges on its unique technology, high margins, and strong cash generation, while the valuation gap creates both risk and opportunity. For investors confident in Inspire’s continued high growth and market adoption, the stock offers a compelling long-term upside, while more cautious investors may view the current pricing as requiring careful timing to mitigate potential downside.

Previously, we covered a bullish thesis on Medtronic plc (MDT) by Magnus Ofstad in April 2025, which highlighted the role of activist involvement, potential divestitures, and operational improvement to unlock value. MDT’s stock price has appreciated by approximately 14.48% since our coverage. This is because the thesis played out as activist pressure renewed confidence despite ongoing execution risks. Francesco Ferrari shares a similar thesis but emphasizes high-growth niche dominance and valuation sensitivity at Inspire Medical Systems.

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Disclosure: None.