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Insulet Rides on DexCom Pact, Omnipod's Wider Market Reach

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On Mar 19, we updated a research report on Insulet Corporation (PODD - Free Report) . Although the company’s achievement of two milestones with respect to expansion of the Omnipod’s market reach makes us optimistic, a tough competitive landscape raises a concern. The stock currently carries a Zacks Rank #3 (Hold).

Shares of this leading developer, manufacturer and marketer of the Omnipod Insulin Management System have been outperforming its industry over the past six months. The stock has lost 16.6% compared with the industry’s 27.6% fall.

Insulet exited fourth-quarter 2019 with better-than-expected revenues. Solid global uptake of the Omnipod system led to this year-over-year revenue growth. The upbeat outlook for 2020 for the Omnipod business, along with continued investments in the company’s pipeline (including clinical trial and subsequent launch of Omnipod Horizon), buoys optimism.

It is planning on the expansion of Omnipod DASH across Europe and Canada, which further uplifts market sentiment. The company also remains focused toward advancing with its strategic initiatives forward.

Insulet has been making progress with respect to its development roadmap of the Omnipod Horizon automated insulin delivery (AID) system. Recent market research by Seagrove Partners suggested that a large percentage of respondents will choose switching to Horizon, thereby making it the most successful standalone product. The company has been registering significant progress with its Horizon clinical development work.

The company is progressing well with its Omnipod Horizon clinical trial and is planning a subsequent launch in the United States. Insulet broadened its collaboration with DexCom to integrate DexCom’s G6 and future G7 continuous glucose monitoring systems into the Omnipod Horizon system. Insulet is also on track with the expansion of partnership with Abbott to integrate Abbott’s next-generation Libre glucose sensing technology into the next-generation Omnipod Horizon system. Given the potential of the diabetes market, Insulet is concentrating on shifting resources toward maximizing its AID development efforts with the company’s sensor partners.

Meanwhile, Insulet operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the stiff rivalry and regulatory conditions prevalent in the markets where Insulet operates limit its ability to switch to strategies like price increases. The company’s Omnipod System primarily contests with Medtronic plc’s (MDT - Free Report) market-leading MiniMed system.

Furthermore, the company is exposed to risks associated with a weaker global economy and lower reimbursement rates.

Key Picks

Some better-ranked stocks in the broader medical space are ResMed Inc. (RMD - Free Report) , Medtronic plc (MDT - Free Report) and Hill-Rom Holdings, Inc. .

ResMed has a projected long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company presently holds a Zacks Rank of 2.

Hill-Rom’s long-term earnings growth rate is projected at 11.1%. It currently carries a Zacks Rank #2.

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