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Here's Why You Should Hold on to Insulet (PODD) Stock for Now
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Insulet Corporation (PODD - Free Report) is gaining from robust uptake of the Omnipod system. The company ended the third quarter with better-than-expected revenues. A strong solvency position bodes well for the company. The raised full-year guidance appears promising. However, a consistent dull earnings environment and stiff competition raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 9.8% versus 2.2% fall of the industry and a 29.8% rise of the S&P 500.
The renowned developer, manufacturer and marketer of insulin delivery systems has a market capitalization of $18.11 billion. The company’s earnings per share (EPS) missed estimates in the trailing four quarters, the average negative surprise being 114.8%.
The company projects 957.1% earnings growth for 2022, which compares to the industry’s growth expectation of 19.5% and the S&P 500’s estimated 9.5% growth for the next year.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Insulet exited the third quarter of 2021 with better-than-expected revenues. A year-over-year improvement in the top line on solid uptake of the Omnipod system buoys optimism. The data presented at EASD 2021 demonstrating the efficacy of the Omnipod 5 Automated Insulin Delivery System looks encouraging. Expansion of both margins is an added advantage. The raised full-year and fourth-quarter 2021 revenue outlook is indicative of the continuation of this bullish trend.
Encouraging Omnipod Growth: We are upbeat about robust revenue growth across the Omnipod product line. In the third quarter, Insulet’s U.S. and international diabetes product lines achieved solid results with total Omnipod growth of 22.7% year over year. The company registered U.S. Omnipod revenue growth of 26.4%, led by a growing customer base, Omnipod DASH adoption and ongoing mix benefit as the company shifts volume into the pharmacy channel. International Omnipod revenues rose 14% at CER in the reported quarter, driven by an expanded customer base and the company’s ability to navigate COVID-related challenges.
Strong Solvency: Insulet exited the third quarter of 2021 with cash and cash equivalents of $857.1 million. Meanwhile, total debt was $1.26 billion in the period, much higher than the corresponding cash and cash equivalent level. On a positive note, the company's short-term-payable debt of $29 million is much less than the cash and cash equivalents and short-term investments. This is good news in terms of the company’s solvency level, as at least during the year of economic downturn, the company is obligated with much lower debt repayment.
Downsides
Dull Earnings Scenario: During the third quarter, Insulet’s adjusted EPS of 20 cents missed the Zacks Consensus Estimate by 9.1%. The company’s escalating expenses built pressure on the bottom line, as selling, general & administrative expenses rose 31.7% year over year in the reported quarter.
Sole Reliance on Omnipod System: Insulet’s financial results largely depend on the Omnipod System. Per the company, any adverse change in the market acceptance of the product or worsening of the factors that negatively influence sales will dent the company’s financials majorly. The projection of a significant fall in Omnipod revenues in 2021 raises our concern.
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 where the company operates limit its ability to switch to strategies like price increase and other drivers of cost increases.
Estimate Trend
Over the past 60 days, the Zacks Consensus Estimate for Insulet’s EPS has moved north by 27.3% to 14 cents.
The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $298.38 million, suggesting a 21.2% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Varex Imaging Corporation (VREX - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Varex, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 115.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Varex has outperformed the industry it belongs to in the past year. VREX has gained 73.1% versus the industry’s 2.2% fall.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 66% versus the 57.2% industry decline.
West Pharmaceutical, sporting a Zacks Rank #2, has a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed its industry over the past year. WST has rallied 62.9% versus the industry’s 15.3% rise.
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Here's Why You Should Hold on to Insulet (PODD) Stock for Now
Insulet Corporation (PODD - Free Report) is gaining from robust uptake of the Omnipod system. The company ended the third quarter with better-than-expected revenues. A strong solvency position bodes well for the company. The raised full-year guidance appears promising. However, a consistent dull earnings environment and stiff competition raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 9.8% versus 2.2% fall of the industry and a 29.8% rise of the S&P 500.
The renowned developer, manufacturer and marketer of insulin delivery systems has a market capitalization of $18.11 billion. The company’s earnings per share (EPS) missed estimates in the trailing four quarters, the average negative surprise being 114.8%.
The company projects 957.1% earnings growth for 2022, which compares to the industry’s growth expectation of 19.5% and the S&P 500’s estimated 9.5% growth for the next year.
Let’s delve deeper.
Factors At Play
Q3 Upsides: Insulet exited the third quarter of 2021 with better-than-expected revenues. A year-over-year improvement in the top line on solid uptake of the Omnipod system buoys optimism. The data presented at EASD 2021 demonstrating the efficacy of the Omnipod 5 Automated Insulin Delivery System looks encouraging. Expansion of both margins is an added advantage. The raised full-year and fourth-quarter 2021 revenue outlook is indicative of the continuation of this bullish trend.
Encouraging Omnipod Growth: We are upbeat about robust revenue growth across the Omnipod product line. In the third quarter, Insulet’s U.S. and international diabetes product lines achieved solid results with total Omnipod growth of 22.7% year over year. The company registered U.S. Omnipod revenue growth of 26.4%, led by a growing customer base, Omnipod DASH adoption and ongoing mix benefit as the company shifts volume into the pharmacy channel. International Omnipod revenues rose 14% at CER in the reported quarter, driven by an expanded customer base and the company’s ability to navigate COVID-related challenges.
Strong Solvency: Insulet exited the third quarter of 2021 with cash and cash equivalents of $857.1 million. Meanwhile, total debt was $1.26 billion in the period, much higher than the corresponding cash and cash equivalent level. On a positive note, the company's short-term-payable debt of $29 million is much less than the cash and cash equivalents and short-term investments. This is good news in terms of the company’s solvency level, as at least during the year of economic downturn, the company is obligated with much lower debt repayment.
Downsides
Dull Earnings Scenario: During the third quarter, Insulet’s adjusted EPS of 20 cents missed the Zacks Consensus Estimate by 9.1%. The company’s escalating expenses built pressure on the bottom line, as selling, general & administrative expenses rose 31.7% year over year in the reported quarter.
Sole Reliance on Omnipod System: Insulet’s financial results largely depend on the Omnipod System. Per the company, any adverse change in the market acceptance of the product or worsening of the factors that negatively influence sales will dent the company’s financials majorly. The projection of a significant fall in Omnipod revenues in 2021 raises our concern.
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 where the company operates limit its ability to switch to strategies like price increase and other drivers of cost increases.
Estimate Trend
Over the past 60 days, the Zacks Consensus Estimate for Insulet’s EPS has moved north by 27.3% to 14 cents.
The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $298.38 million, suggesting a 21.2% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are Varex Imaging Corporation (VREX - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Varex, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 115.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Varex has outperformed the industry it belongs to in the past year. VREX has gained 73.1% versus the industry’s 2.2% fall.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 66% versus the 57.2% industry decline.
West Pharmaceutical, sporting a Zacks Rank #2, has a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed its industry over the past year. WST has rallied 62.9% versus the industry’s 15.3% rise.