Overview
Piper Sandler on Friday lowered its price target on Inspire Medical Systems (NYSE:INSP) to $85.00 from $165.00, while leaving its rating at Overweight. Market data show the stock trading at $68.21, close to its 52-week low of $64.46, and technical indicators point toward oversold conditions.
Analyst rationale
The firm identified ongoing uncertainty around reimbursement for Inspire’s Gen 5 device as the principal reason for the dramatic reduction in its price target. Piper Sandler highlighted that a recent coding clarification has shifted how the Gen 5 procedure will be billed, and that change has direct implications for physician reimbursement levels.
Specifically, Inspire will bill the Gen 5 procedure under CPT code 64582 with a -52 modifier after this clarification, moving away from its prior approach of billing under code 64568. Piper Sandler noted that this change will lower physician reimbursement, but it does offer a clearer and more predictable billing pathway. The company is pursuing a dedicated CPT code for the Inspire 5 procedure, though that code is not expected to take effect until January 1, 2028.
Financial results and guidance
Inspire reported fourth-quarter results that aligned with its previously announced revenue figures and delivered an adjusted earnings per share of $1.65. That adjusted EPS beat expectations, including those from Piper Sandler. The company also reported revenue of $269.1 million for the quarter, topping a consensus expectation of $263.81 million.
Despite the near-term headwinds, Inspire remains profitable and maintains a conservative balance sheet position, holding more cash than debt.
However, the company trimmed its fiscal year 2026 revenue guidance to a range of $950 million to $1,000 million, down from a prior outlook of $1,003 million to $1,013 million. On a year-over-year basis this now implies growth of roughly 4% to 10%, compared with the earlier 10% to 11% projection. Management attributed the reduced guidance to ongoing reimbursement challenges tied to the Gen 5 product.
Broker reactions and market sentiment
The earnings beat did not prevent other brokers from moving to more cautious stances. Wells Fargo downgraded its rating on Inspire from Overweight to Equal Weight, citing the same reimbursement uncertainties as a material concern for the company’s outlook. Wells Fargo also lowered its price target to $70.00. Similarly, Baird moved its rating from Outperform to Neutral and set a new target of $74.00, explicitly pointing to physician reimbursement as a risk to growth.
Some market analyses suggest the company may be undervalued at current levels, and additional subscriber-focused insights are reported to be available for investors seeking deeper perspectives on Inspire’s financial health and growth prospects.
Implications
The immediate impact of the coding clarification is a reduction in physician reimbursement for the Gen 5 procedure, which has already prompted analysts to rework financial models and lower near-term expectations. While Inspire remains profitable and has a solid cash position, the pace of adoption and revenue growth for Gen 5 will depend heavily on how reimbursement evolves and whether a new dedicated CPT code can be secured by 2028.
Bottom line
Inspire’s latest quarter showed operational strength in revenue and earnings, but the path forward is clouded by reimbursement questions for its Gen 5 device. Piper Sandler’s sharp cut to its price target reflects the degree to which coding and reimbursement dynamics can reshape near-term valuation, even as the company retains core profitability and a favorable balance sheet.