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Insulet Rides on Innovation, Omnipod's Wider Market Appeal

Zacks Equity Research

On Dec 16, we updated a research report on Insulet Corporation PODD. Although the company’s achievement of two milestones with respect to expansion of Omnipod’s market reach makes us optimistic, a tough competitive landscape raises a concern. The stock 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 three months. The stock has rallied 13.9% compared with the industry’s 1.2% rise.

Insulet exited the third quarter with better-than-expected numbers. The company witnessed a year-over-year improvement in revenues on the solid uptake of Omnipod system in the United States and overseas. Pod production at the U.S. manufacturing facility and the commercial launch of the Omnipod DASH system in the United States drove the quarterly revenues.

Insulet Corporation Price

Insulet Corporation Price

Insulet Corporation price | Insulet Corporation Quote

The recent FDA clearance of the Alternate Controller Enabled (ACE) Infusion Pump is impressive. We are also upbeat about the completion of the full-market commercial rollout of the Omnipod DISPLAY and Omnipod VIEW apps for use with the Omnipod DASH System. Moreover, the company’s upped 2019 guidance and its announcement for being on track already to meet the 2021 financial targets buoy hopes on the stock. 

Insulet attained several landmarks with regard to extending Omnipod’s market access. In the third quarter, the company successfully broadened the Omnipod DASH coverage for commercial, Medicare and Medicaid beneficiaries. By the end of the period, the reach was wider covering above 50% of all Medicare beneficiaries.

Further, Insulet is effectively utilizing its pay-as-you-go model and the pharmacy channel for greater market access. Through these efforts, Omnipod DASH is available with zero upfront cost. This implies higher patient base for Omnipod DASH. Per the company, since the DASH launch, a record number of new users adopted Omnipod in the United States.

Meanwhile, Insulet operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources at disposal 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) market-leading MiniMed system.

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

Key Picks

A few better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, NuVasive, Inc NUVA and ResMed RMD. While ResMed flaunts a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Haemonetics has a projected long-term earnings growth rate of 13.5%.

NuVasive has an expected long-term earnings growth rate of 10.9%.

ResMed has a long-term earnings growth rate of 12.9%.

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Haemonetics Corporation (HAE) : Free Stock Analysis Report
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