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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 fourth quarter of 2021 with better-than-expected results. However, economic uncertainty and stiff competition raise apprehensions.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 5.3% versus 17.4% fall of the industry. The S&P 500 rose 9% in the said time frame.
The renowned developer, manufacturer and marketer of insulin delivery systems has a market capitalization of $17.07 billion. In the fourth quarter of 2021, the company’s earnings surpassed the Zacks Consensus Estimate by 40%.
Let’s delve deeper,
Key Drivers
Impressive Q4 Result: Insulet exited the fourth quarter of 2021 on a bullish note, with better-than-expected earnings and revenues. The company reported year-over-year improvement in the top line on solid uptake of the Omnipod system, both in the U.S. and international markets. This growth amid the pandemic was primarily due to robust revenue increase in the Omnipod product line. The drug delivery revenues increased 113% during the quarter, led by increased production volumes as a result of higher-than-expected demand. Expansion of both margins is another upside.
Omnipod’s Market Access Expansion Continues: Insulet has achieved several milestones with respect to expanding Omnipod’s market access. In this regard, the company is consistently gaining from the full commercial launch of the Omnipod DASH system in the United States in 2019. In September 2020, the company made a full commercial rollout of Omnipod DASH in Europe. During the fourth quarter, Insulet launched the Omnipod DASH system in Australia and Turkey. Also, Insulet expects additional market expansion in the Middle East in 2022.
Image Source: Zacks Investment Research
Diabetes Market Boom: An aging population, unhealthy lifestyle, rising awareness and higher expenditure in healthcare are likely to continue driving the highly competitive diabetes market. Per a report by Fortune Business Insights, the global diabetes device market size is expected to reach $33.55 billion by 2026 from $20.92 billion in 2019, at a CAGR of 6.1%. Considering market growth, Insulet’s diabetes business is expected to witness strong growth in the coming years. The company noted that its international expansion will further increase its global addressable market beyond the 11 to 12 million people living with insulin-dependent diabetes globally.
Downsides
Economic Uncertainty: Weaker global economic conditions may reduce demand for Insulet’s products, intensify competition, exert pressure on prices, dent supply and lengthen sales cycle. Moreover, a number of countries in Western Europe are facing a liquidity crunch. Insulet is also exposed to the risk of a reduction in healthcare spending in the United States, Canada and Europe due to an economic slump.
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 Insulet’s ability to switch to strategies like price increases.
Estimate Trend
Over the past 60 days, the Zacks Consensus Estimate for Insulet’s earnings per share has moved down by 5.9% to $1.28
The Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $286.9 million, suggesting a 13.7% rise from the year-ago reported number.
Key Picks
Few better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 55% compared with the industry’s 5.7% growth in the past year.
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 34.5% versus the 60.4% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.
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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 fourth quarter of 2021 with better-than-expected results. However, economic uncertainty and stiff competition raise apprehensions.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 5.3% versus 17.4% fall of the industry. The S&P 500 rose 9% in the said time frame.
The renowned developer, manufacturer and marketer of insulin delivery systems has a market capitalization of $17.07 billion. In the fourth quarter of 2021, the company’s earnings surpassed the Zacks Consensus Estimate by 40%.
Let’s delve deeper,
Key Drivers
Impressive Q4 Result: Insulet exited the fourth quarter of 2021 on a bullish note, with better-than-expected earnings and revenues. The company reported year-over-year improvement in the top line on solid uptake of the Omnipod system, both in the U.S. and international markets. This growth amid the pandemic was primarily due to robust revenue increase in the Omnipod product line. The drug delivery revenues increased 113% during the quarter, led by increased production volumes as a result of higher-than-expected demand. Expansion of both margins is another upside.
Omnipod’s Market Access Expansion Continues: Insulet has achieved several milestones with respect to expanding Omnipod’s market access. In this regard, the company is consistently gaining from the full commercial launch of the Omnipod DASH system in the United States in 2019. In September 2020, the company made a full commercial rollout of Omnipod DASH in Europe. During the fourth quarter, Insulet launched the Omnipod DASH system in Australia and Turkey. Also, Insulet expects additional market expansion in the Middle East in 2022.
Image Source: Zacks Investment Research
Diabetes Market Boom: An aging population, unhealthy lifestyle, rising awareness and higher expenditure in healthcare are likely to continue driving the highly competitive diabetes market. Per a report by Fortune Business Insights, the global diabetes device market size is expected to reach $33.55 billion by 2026 from $20.92 billion in 2019, at a CAGR of 6.1%. Considering market growth, Insulet’s diabetes business is expected to witness strong growth in the coming years. The company noted that its international expansion will further increase its global addressable market beyond the 11 to 12 million people living with insulin-dependent diabetes globally.
Downsides
Economic Uncertainty: Weaker global economic conditions may reduce demand for Insulet’s products, intensify competition, exert pressure on prices, dent supply and lengthen sales cycle. Moreover, a number of countries in Western Europe are facing a liquidity crunch. Insulet is also exposed to the risk of a reduction in healthcare spending in the United States, Canada and Europe due to an economic slump.
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 Insulet’s ability to switch to strategies like price increases.
Estimate Trend
Over the past 60 days, the Zacks Consensus Estimate for Insulet’s earnings per share has moved down by 5.9% to $1.28
The Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $286.9 million, suggesting a 13.7% rise from the year-ago reported number.
Key Picks
Few better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson, carrying a Zacks Rank #2 (Buy), reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 55% compared with the industry’s 5.7% growth in the past year.
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 34.5% versus the 60.4% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.