Insulet Corporation PODD has been progressing well with respect to its four-pillar strategy and seems to be well on track to achieve revenues of $1 billion by 2021. The four key initiatives are expanding Omnipod’s market access, executing on its innovation roadmap, building the U.S. manufacturing facility and implementing its plan to sell directly in Europe.
In the past year, the company’s shares have outperformed the industry. The stock has rallied 77.2% compared with the industry’s 5.8% rise.
The company has a market cap of $9.20 billion.
Thanks to the encouraging factors, this Zacks Rank #3 (Hold) company is still worth holding onto.
Growth Driving Factors
Market Access Expansion Continues: Insulet has achieved several milestones with respect to expanding Omnipod’s market access. In this regard, throughout the second quarter, the company has been consistently gaining from the full commercial launch of the Omnipod DASH system in the United States.
Omnipod Horizon, a New Focus: Insulet has been making progress with respect to its development roadmap of the Omnipod Horizon automated insulin delivery system. The company has been registering significant progress with its Horizon clinical development work and is well on track to start pivotal trials in the fourth quarter of 2019 so that the technology is ready to be brought to market by the second half of next year.
Raised Guidance Buoys Optimism: For 2019, the company has raised its revenue expectation to the range of $700-$715 million from the prior $667-$690 million. For the third quarter of 2019, Insulet expects revenues in the band of $174-181 million, indicating an increase of 15-20% from the year-ago number. This indicates promising return to shareholders.
However, a few factors have been deterring the company’s growth.
Sole Reliance on Omnipod System: Insulet’s financial results continue to largely depend on the performance of its lead product — Omnipod System. Per the company, any adverse change in market acceptance of the product or worsening of the factors that influence sales will dent the company’s financials majorly.
Economic Uncertainty Hampers Growth: 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.
A few better-ranked stocks in the broader medical space are Medtronic MDT, Baxter BAX and NuVasive Corporation NUVA. Each of these companies 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 expected at 7.13%.
Baxter’s long-term earnings growth rate is projected at 12.8%.
NuVasive’s long-term earnings growth rate is expected to be 12.75%.
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