Insulet Corporation PODD is gradually benefiting from seamless supply chain and manufacturing operations. Solid prospects of the diabetes market bode well for the company. However, Insulet’s heavy reliance on the Omnipod System and a tough competitive landscape add to the woes. The stock carries a Zacks Rank #3 (Hold).
Over the past year, Insulet has been outperforming its industry. The stock has lost 10.2% compared with the industry’s 19.4% fall.
Insulet exited the fourth quarter of 2021 on a bullish note, with better-than-expected earnings and revenues. The company reported a 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 growth in the Omnipod product line.
The drug delivery revenues increased 113% during the quarter, led by increased production volumes, driven by higher-than-expected demand from the partner. Expansion of both margins was another upside. The bullish full-year and first-quarter 2022 outlook is indicative of the continuation of the uptrend.
Insulet has been progressing well with respect to its four-pillar strategy, where the first two pillars include expanding access and awareness and delivering consumer-focused innovation.
Insulet Corporation Price
Insulet Corporation price | Insulet Corporation Quote
In terms of the first strategy of access and awareness, the global diabetes market is growing rapidly, with millions of people expected to be newly diagnosed in 2022. In terms of the second strategy of delivering consumer-focused innovation, Insulet’s sales and marketing teams and international expansion efforts are currently aligning with its long-term growth profile.
The third part of Insulet’s four-pillar strategy is to grow its global addressable market. In this regard, Insulet expanded its efforts and the rollout of Omnipod DASH across the international markets through targeted geographic expansion by entering the Asia Pacific region through Australia and also expanded into Turkey. The fourth focus area of Insulet is to drive operational excellence. The company earlier noted that Omnipod 5 will be available only through the pharmacy in the United States.
On the flip side, during the fourth quarter of 2021, research and development expenses rose 9.1% year over year. Escalating expenses are building pressure on the bottom line. The projection of a decline of 30% to 35% for drug delivery revenues in 2022 as levels were elevated during the pandemic is discouraging. Overall, the continued pandemic-led choppy market conditions raise apprehension.
Further, Insulet’s financial results continue to largely depend on the performance of its lead product — Omnipod System. Per the company, any adverse changes in the market acceptance of the product or worsening of the factors that negatively influence the sale will dent the company’s financials majorly.
This apart, Insulet operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. The company’s Omnipod System primarily competes with Medtronic’s market-leading MiniMed. Notably, MiniMed boasts a major part of the conventional insulin pump market share in the United States.
A few better-ranked stocks in the broader medical space are McKesson Corporation MCK, AMN Healthcare Services, Inc. AMN and Bio-Rad Laboratories, Inc. BIO.
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 stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% 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 23.8% versus the 62% 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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