Chicago, IL - Baird announced a downgrade of Inspire Medical Systems (NYSE:INSP), moving the stock from Outperform to Neutral and cutting its price target to $74 from $130 on Thursday. At the time of the note, the shares were trading at $68.21, reflecting a decline of more than 63% year over year and resting only slightly above their 52-week low of $64.46.
The research firm framed the decision around mounting reimbursement challenges that prompted it to reduce Inspire Medical's fiscal 2026 outlook. Those reimbursement developments, Baird said, introduce uncertainty around future utilization rates and the pace of new account acquisition - two factors the firm identified as material to the company's growth prospects.
Baird also observed that, while Inspire's stock currently trades below peer multiples, the unresolved reimbursement issues make it difficult to justify assigning a higher valuation multiple. In practical terms, the firm signaled caution, saying it will remain "on the sidelines" with respect to the stock until there is clearer evidence that the company can reestablish a more stable and higher-growth path.
Quarterly results versus the backdrop
Separately, Inspire Medical Systems reported fourth-quarter 2025 results that materially exceeded analyst expectations. The company posted earnings per share of $1.65, compared with a consensus forecast of $0.68 - a positive surprise of 142.65%. Revenue for the quarter came in at $269.1 million against predicted revenue of $263.81 million. Those figures indicate a strong operational quarter relative to market estimates.
Despite the beat on both earnings and revenue, the company's shares were largely unchanged in after-hours trading. The juxtaposition of a strong earnings print and the subsequent analyst downgrade highlights a split between near-term operational performance and the longer-term growth concerns tied to reimbursement policy and outlook revisions.
What remains uncertain
Baird's note emphasizes that the key unknowns are how the reimbursement changes will affect (1) utilization among existing patients and (2) the company's ability to win new accounts. Until those variables are resolved or clarified, the firm is reluctant to move off a neutral view despite the company's recent quarter-end results.