Insulin Delivery Growth Driving Insulet Higher and Higher

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Aren’t politicians going after drug prices and just about any costs tied to health care that they can get their hands and minds around? That may be the case during the election cycle, but many companies are continuing to grow in health care, and some of them are expected to keep growing regardless of what happens in Washington, D.C., and regardless of an election outcome. It turns out that some people with diabetes are still going to need medical treatment, regardless of the political climate.

Insulet Corp. (NYSE: PODD) shares surged after it reported earnings. The company’s Omnipod insulin management system saw stellar growth in sales and adoption of its tubeless insulin pump technology, and the higher growth is coming from outside of the United States — outside of the hands of U.S. politicians and those who want to have leadership.

Second-quarter revenue growth was 43% to $177.1 million, and that exceeded guidance $160 million to $165 million. Its global Omnipod revenue rose by 51% to $160.8 million, and U.S. Omnipod revenue rose by 26% to $98.1 million. International Omnipod revenue rose by 120% to $62.7 million.

The company further said that its drug delivery revenue did fall by 8% to $16.3 million. Its gross margin fell by 30 basis points to 65.7%. Still, Insulet’s operating income rose to $7.6 million from $4.3 million in the prior year. The company is also shifting into profitability as net income of $1.4 million, translated to $0.02 per share, versus to a net loss of $1.7 million, or −$0.03 per share, a year earlier.

With clinical data on the Omnipod Horizon maintaining glucose control and with an increase in coverage for Omnipod Dash in the United States to approximately half of all covered lives, Insulet also raised its outlook for all of 2019 (revenue guidance to $700 million to $715 million for 2019 from a previous forecast of $667 million to $690 million), and the company said that it remains on track to meet its 2021 financial targets.

Several firms on Wall Street have raised their expectations on Insulet. Morgan Stanley maintained its Equal Weight rating but raised its target price to $135 from $127. BMO Capital Markets reiterated its Outperform rating but raised its target to $150 from $130, while Raymond James reiterated its Outperform rating and raised its target to $135 from $125. JPMorgan upgraded Insulet to Overweight from Neutral and raised its target price to $155 from $120.

Canaccord Genuity’s Kyle Rose reiterated his Buy rating and raised his target to $135 from $110 on Insulet. His report said:

After a stellar 2018, Insulet once again reported another quarter of strong top-line growth and raised guidance for the full year 2019. Net, net we continue to believe the company is positioned favorably as it begins to move into what we view as a compelling new product cycle in Dash. While the stock has had an impressive run this year (+61%), we think Insulet remains in the early stages of a transformative 24-month period that will see meaningful global share gains and significant margin expansion as the new manufacturing facility comes on line more fully in the second half of 2019.

Insulet shares were trading up 22% at $139.93 on more than 1.5 million shares in midday trading. Its shares now have a new 52-week trading range of $70.80 to $149.36, and the market cap is up to $8.4 billion. Refinitiv previously had a consensus target price of $119.63, but that number will be higher after the updated price targets adjust.

This was less than $50 per share stock through the first half of 2017, and the last post-earnings reaction has taken Insulet’s stock to all-time highs.


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