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Here's Why You Should Retain Insulet (PODD) Stock for Now
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Insulet Corporation (PODD - Free Report) is well-poised for growth in the coming quarters, backed by strength in Omnipod 5 and focus on market expansion. The company’s recent first-quarter2023 results raise investors’ optimism. However, escalating expenses and a substantial fall in drug delivery sales are discouraging.
In the past year, this Zacks Rank #3 (Hold) stock has increased 38.9% compared with the 19.8% fall of the industry and a 18.7% rise of the S&P 500 composite.
The developer, manufacturer and distributor of insulin delivery systems has a market capitalization of $20.12 billion. Insulet projects a long-term estimated earnings growth rate of 35.1% compared with 14.1% of the industry. PODD’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 80.22%.
Let’s delve deeper.
Upsides
Q1 Upsides: Insulet exited the first quarter of 2023 with better-than-expected earnings and revenues. The company’s performance benefited from record first-quarter U.S. revenue growth of 49% and total Omnipod growth of 35%. The company delivered record first-quarter numbers in terms of United States and global new customer starts. Omnipod 5 continued to be a driving force of Insulet’s strong U.S. growth and in the first quarter, contributing almost 95% to the company’s U.S. new customer starts.
Focus on Market Expansion and Operational Excellence: The third part of Insulet’s four-pillar strategy is to expand its global addressable market. In this regard, Insulet expanded its efforts and the rollout of Omnipod DASH across the international markets through targeted geographic expansion by entering the Asia Pacific region through Australia and also expanded into Turkey. The Omnipod DASH was also launched in Saudi Arabia and the United Arab Emirates. Together, these countries expand Insulet’s total addressable market by nearly 1 million.
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Per the first-quarter earnings update, Omnipod 5 continues to drive customer adoption from all market segments. During the quarter, individuals with type 2 represented an estimated 15-20% of the U.S. new customer starts across Omnipod portfolio of products. Insulet expects to build on the leading competitive position in this market and expand its total addressable market with the planned 2024 commercialization of the new basal-only pod. Omnipod 5, a New Focus: Insulet has been making progress with respect to its development roadmap of the Omnipod Horizon (now Omnipod 5) automated insulin delivery(AID) system.
Per the first-quarter earnings update, Omnipod 5 continues to be a driving force behind U.S. growth and in Q1, contributing almost 95% to U.S. new customer starts. The real-world evidence Insulet presented at ATTD with data from more than 31,000 Omnipod 5 users is unmatched by competitors.
Downsides
Lumpy Drug Delivery Business: During the first quarter, the substantial fall in Insulet’s Drug Delivery sales is discouraging. The contraction in margins does not bode well. On a year-over-year basis, the company expects gross margin to be impacted by higher costs associated with the U.S. manufacturing ramp, product line mix stemming from the ramp-up of Omnipod 5 and lower drug delivery revenues. Supply chain disruptions and inflationary pressures continue to challenge business operations.
Tough Competitive Pressure: Insulet operates in a highly-competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets limit Insulet’s ability to switch to strategies like price increases and other drivers of cost increases.
Estimate Trend
Insulet has been witnessing a positive estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 10.4% to $1.37 in the past 90 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.57 billion. This suggests a 20.3% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are CONMED (CNMD - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Dentsply Sirona (XRAY - Free Report) .
CONMED, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 19.4%. The company’s earnings surpassed estimates in two of the trailing four quarters, missed once and met in another, recording a negative average surprise of 10.54%.
Merit Medical, currently carrying a Zacks Rank #2, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Merit Medical’s shares have improved 60.2% compared with the industry’s 21.3% growth in the past year.
Dentsply Sirona, carrying a Zacks Rank #2, has an estimated long-term growth rate of 9.1%. XRAY delivered a trailing four-quarter average earnings surprise of 10.47%.
The company’s shares have rallied 22.7% year to date compared with the industry’s 8.6% growth.
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Here's Why You Should Retain Insulet (PODD) Stock for Now
Insulet Corporation (PODD - Free Report) is well-poised for growth in the coming quarters, backed by strength in Omnipod 5 and focus on market expansion. The company’s recent first-quarter2023 results raise investors’ optimism. However, escalating expenses and a substantial fall in drug delivery sales are discouraging.
In the past year, this Zacks Rank #3 (Hold) stock has increased 38.9% compared with the 19.8% fall of the industry and a 18.7% rise of the S&P 500 composite.
The developer, manufacturer and distributor of insulin delivery systems has a market capitalization of $20.12 billion. Insulet projects a long-term estimated earnings growth rate of 35.1% compared with 14.1% of the industry. PODD’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 80.22%.
Let’s delve deeper.
Upsides
Q1 Upsides: Insulet exited the first quarter of 2023 with better-than-expected earnings and revenues. The company’s performance benefited from record first-quarter U.S. revenue growth of 49% and total Omnipod growth of 35%. The company delivered record first-quarter numbers in terms of United States and global new customer starts. Omnipod 5 continued to be a driving force of Insulet’s strong U.S. growth and in the first quarter, contributing almost 95% to the company’s U.S. new customer starts.
Focus on Market Expansion and Operational Excellence: The third part of Insulet’s four-pillar strategy is to expand its global addressable market. In this regard, Insulet expanded its efforts and the rollout of Omnipod DASH across the international markets through targeted geographic expansion by entering the Asia Pacific region through Australia and also expanded into Turkey. The Omnipod DASH was also launched in Saudi Arabia and the United Arab Emirates. Together, these countries expand Insulet’s total addressable market by nearly 1 million.
Per the first-quarter earnings update, Omnipod 5 continues to drive customer adoption from all market segments. During the quarter, individuals with type 2 represented an estimated 15-20% of the U.S. new customer starts across Omnipod portfolio of products. Insulet expects to build on the leading competitive position in this market and expand its total addressable market with the planned 2024 commercialization of the new basal-only pod.
Omnipod 5, a New Focus: Insulet has been making progress with respect to its development roadmap of the Omnipod Horizon (now Omnipod 5) automated insulin delivery(AID) system.
Per the first-quarter earnings update, Omnipod 5 continues to be a driving force behind U.S. growth and in Q1, contributing almost 95% to U.S. new customer starts. The real-world evidence Insulet presented at ATTD with data from more than 31,000 Omnipod 5 users is unmatched by competitors.
Downsides
Lumpy Drug Delivery Business: During the first quarter, the substantial fall in Insulet’s Drug Delivery sales is discouraging. The contraction in margins does not bode well. On a year-over-year basis, the company expects gross margin to be impacted by higher costs associated with the U.S. manufacturing ramp, product line mix stemming from the ramp-up of Omnipod 5 and lower drug delivery revenues. Supply chain disruptions and inflationary pressures continue to challenge business operations.
Tough Competitive Pressure: Insulet operates in a highly-competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets limit Insulet’s ability to switch to strategies like price increases and other drivers of cost increases.
Estimate Trend
Insulet has been witnessing a positive estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 10.4% to $1.37 in the past 90 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.57 billion. This suggests a 20.3% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are CONMED (CNMD - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Dentsply Sirona (XRAY - Free Report) .
CONMED, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 19.4%. The company’s earnings surpassed estimates in two of the trailing four quarters, missed once and met in another, recording a negative average surprise of 10.54%.
CNMD’s shares have risen 54.2% in the past year compared with the industry’s 21.3% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical, currently carrying a Zacks Rank #2, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Merit Medical’s shares have improved 60.2% compared with the industry’s 21.3% growth in the past year.
Dentsply Sirona, carrying a Zacks Rank #2, has an estimated long-term growth rate of 9.1%. XRAY delivered a trailing four-quarter average earnings surprise of 10.47%.
The company’s shares have rallied 22.7% year to date compared with the industry’s 8.6% growth.