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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 likely to gain in the coming quarters, backed by its revolutionary offering, the Omnipod 5 Automated Insulin Delivery (“AID”) system. The company achieved record U.S. and total Omnipod new customer starts for the first quarter.
Further, Insulet is making good headway in the developmental work to integrate Omnipod 5 with DexCom’s G7 and Abbott’s Libre systems. The advancement of the company’s diabetes business sounds encouraging.
However, a highly competitive environment and economic uncertainty are concerning for the company. In the past year, this Zacks Rank #3 (Hold) stock has decreased 0.8% compared with the 4.4% fall of the industry and an 8.4% rise of the S&P 500 composite.
The developer, manufacturer and distributor of insulin delivery systems has a market capitalization of $18.34 billion. Insulet projects a long-term estimated earnings growth rate of 35.1% compared with 14% 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 80.2%.
Let’s delve deeper.
Upsides
Omnipod’s Market Access Expansion Continues: Insulet delivered a record first quarter for the U.S. revenue growth of 49% and 35% for total Omnipod and another record for new customer starts both domestically and globally for any first quarter.
U.S. Omnipod revenue growth surpassed the company’s expectations, driven by the annuity-based model with cumulative record new customer starts and growing U.S. pharmacy volumes. This includes an increasing contribution from Omnipod 5 and a premium for the Omnipod 5 and Omnipod DASH pods in the U.S. pharmacy.
Image Source: Zacks Investment Research
International Omnipod revenue growth also benefited from the strong Omnipod DASH adoption. Per the first-quarter update, Insulet expects to introduce Omnipod 5 in the United Kingdom mid-year and Germany in the fall. Additionally, the company is building its new manufacturing facility in Malaysia, which will further strengthen its global capabilities.
Omnipod 5 Transforms Diabetes Management: Per the first-quarter earnings update, Omnipod 5 continues to be a driving force of strong growth in the United States, representing almost 95% of U.S. new customer starts.
The system’s ease of use, simplified access, quality of life, strong clinical outcomes and execution have positioned Insulet to continuously win across all market segments. At the 16th International Conference on Advanced Technologies & Treatments for Diabetes, real-world evidence presented by the company with data from more than 31,000 Omnipod 5 users is unmatched by competitors.
Further, PODD noted that the development work to integrate Omnipod 5 with DexCom’s G7 and Abbott’s Libre systems and iOS integration efforts have been progressing well.
Diabetes Market Boom: The global diabetes device market is expected to witness a CAGR of 7.5% by 2030, led by an increase in technological advancements, the increasing adoption of insulin delivery devices and the rising prevalence of diabetes and obesity.
Insulet has been making significant investments of late to advance its diabetes business. In February 2023, Insulet acquired the assets of Automated Glucose Control LLC — a company in Palo Alto, CA, focused on developing and commercializing best-in-class AID technology.
In the same month, Insulet acquired assets related to Bigfoot’s pump-based AID technologies. Insulet paid $25M for the acquisition, which includes certain Bigfoot patents related to pumps that may be used for AID therapy.
Downsides
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, competitive and regulatory conditions in the markets where the company operates limit Insulet’s ability to switch to strategies like price increases and other drivers of cost increases.
PODD’s Omnipod System primarily competes with Medtronic’s market-leading MiniMed, a division of Medtronic. MiniMed boasts a major part of the conventional insulin pump market share in the United States. Other suppliers in the United States include Tandem Diabetes Care, Inc.
Economic Uncertainty Hampers Growth: Weaker global economic conditions may reduce the demand for Insulet’s products, intensify competition, exert pressure on prices, dent supply and lengthen the sales cycle. 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.
Per the first-quarter 2023 earnings call, Insulet expects an unfavorable product mix, U.S. manufacturing ramp, inflation and supply-chain headwinds to continue to impact business results for the next few years.
Estimate Trend
The Zacks Consensus Estimate for Insulet’s 2023 earnings per share (EPS) has remained constant at $1.38 in the past 30 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.
Haemonetics has an earnings yield of 3.98% against the industry’s -3.55%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.21%. Its shares have risen 29.2% against the industry’s 4.4% decline in the past year.
DexCom, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 42.9% compared with the industry’s 15.8%. Shares of the company have rallied 32.4% against the industry’s 2.9% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 23.8%.
Intuitive Surgical, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 15.7%, almost in line with the industry. Shares of ISRG have risen 29.4% compared with the industry’s 2.9% growth over the past year.
ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.19%.
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Here's Why You Should Retain Insulet (PODD) Stock for Now
Insulet Corporation (PODD - Free Report) is likely to gain in the coming quarters, backed by its revolutionary offering, the Omnipod 5 Automated Insulin Delivery (“AID”) system. The company achieved record U.S. and total Omnipod new customer starts for the first quarter.
Further, Insulet is making good headway in the developmental work to integrate Omnipod 5 with DexCom’s G7 and Abbott’s Libre systems. The advancement of the company’s diabetes business sounds encouraging.
However, a highly competitive environment and economic uncertainty are concerning for the company. In the past year, this Zacks Rank #3 (Hold) stock has decreased 0.8% compared with the 4.4% fall of the industry and an 8.4% rise of the S&P 500 composite.
The developer, manufacturer and distributor of insulin delivery systems has a market capitalization of $18.34 billion. Insulet projects a long-term estimated earnings growth rate of 35.1% compared with 14% 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 80.2%.
Let’s delve deeper.
Upsides
Omnipod’s Market Access Expansion Continues: Insulet delivered a record first quarter for the U.S. revenue growth of 49% and 35% for total Omnipod and another record for new customer starts both domestically and globally for any first quarter.
U.S. Omnipod revenue growth surpassed the company’s expectations, driven by the annuity-based model with cumulative record new customer starts and growing U.S. pharmacy volumes. This includes an increasing contribution from Omnipod 5 and a premium for the Omnipod 5 and Omnipod DASH pods in the U.S. pharmacy.
Image Source: Zacks Investment Research
International Omnipod revenue growth also benefited from the strong Omnipod DASH adoption. Per the first-quarter update, Insulet expects to introduce Omnipod 5 in the United Kingdom mid-year and Germany in the fall. Additionally, the company is building its new manufacturing facility in Malaysia, which will further strengthen its global capabilities.
Omnipod 5 Transforms Diabetes Management: Per the first-quarter earnings update, Omnipod 5 continues to be a driving force of strong growth in the United States, representing almost 95% of U.S. new customer starts.
The system’s ease of use, simplified access, quality of life, strong clinical outcomes and execution have positioned Insulet to continuously win across all market segments. At the 16th International Conference on Advanced Technologies & Treatments for Diabetes, real-world evidence presented by the company with data from more than 31,000 Omnipod 5 users is unmatched by competitors.
Further, PODD noted that the development work to integrate Omnipod 5 with DexCom’s G7 and Abbott’s Libre systems and iOS integration efforts have been progressing well.
Diabetes Market Boom: The global diabetes device market is expected to witness a CAGR of 7.5% by 2030, led by an increase in technological advancements, the increasing adoption of insulin delivery devices and the rising prevalence of diabetes and obesity.
Insulet has been making significant investments of late to advance its diabetes business. In February 2023, Insulet acquired the assets of Automated Glucose Control LLC — a company in Palo Alto, CA, focused on developing and commercializing best-in-class AID technology.
In the same month, Insulet acquired assets related to Bigfoot’s pump-based AID technologies. Insulet paid $25M for the acquisition, which includes certain Bigfoot patents related to pumps that may be used for AID therapy.
Downsides
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, competitive and regulatory conditions in the markets where the company operates limit Insulet’s ability to switch to strategies like price increases and other drivers of cost increases.
PODD’s Omnipod System primarily competes with Medtronic’s market-leading MiniMed, a division of Medtronic. MiniMed boasts a major part of the conventional insulin pump market share in the United States. Other suppliers in the United States include Tandem Diabetes Care, Inc.
Economic Uncertainty Hampers Growth: Weaker global economic conditions may reduce the demand for Insulet’s products, intensify competition, exert pressure on prices, dent supply and lengthen the sales cycle. 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.
Per the first-quarter 2023 earnings call, Insulet expects an unfavorable product mix, U.S. manufacturing ramp, inflation and supply-chain headwinds to continue to impact business results for the next few years.
Estimate Trend
The Zacks Consensus Estimate for Insulet’s 2023 earnings per share (EPS) has remained constant at $1.38 in the past 30 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 Haemonetics (HAE - Free Report) , DexCom (DXCM - Free Report) and Intuitive Surgical (ISRG - Free Report) .
Haemonetics has an earnings yield of 3.98% against the industry’s -3.55%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.21%. Its shares have risen 29.2% against the industry’s 4.4% decline in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DexCom, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 42.9% compared with the industry’s 15.8%. Shares of the company have rallied 32.4% against the industry’s 2.9% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 23.8%.
Intuitive Surgical, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 15.7%, almost in line with the industry. Shares of ISRG have risen 29.4% compared with the industry’s 2.9% growth over the past year.
ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.19%.