In this article, we will discuss: 7 Best Diabetes Stocks To Buy Now.
According to the WHO, approximately 422 million individuals globally suffer from diabetes, with the majority residing in countries with low or middle incomes. Diabetes is directly responsible for an average of 1.5 million fatalities annually. Over the past few decades, there has been a steady rise in both the number of cases and the prevalence of diabetes. On the other hand, the International Diabetes Federation estimates that there are about 500 million diabetics worldwide, and that figure is projected to grow by 25% by 2030 and by 51% by 2045.
To help manage diabetes, both type 1 and type 2, one particular kind of medical device used is the continuous glucose monitor (CGM). The market has grown dramatically in recent years, and it has become a rapidly expanding section of diabetes care devices. The market for advanced diabetes care products — insulin pumps, pens, and continuous glucose monitoring (CGM) equipment, was estimated to be worth $21.8 billion in 2023 per GlobalData. Forecasts from GlobalData indicate that the market will reach revenues of $33.4 billion by 2030, rising at a CAGR of 6.34% over the forecast period.
As per the GlobalData marketed products database, the CGM category presently has 97 products. The vast majority of these devices are traditional CGMs, with only a few implantable sensors. According to the GlobalData pipeline products database, 133 products are either under development or approved. The figures show that this market segment is expanding quickly and is a hub for innovative new technology like implantable CGMs.
Today, CGM technology is also integrating AI. For example, Roche recently introduced new predictive AI-powered CGM technology (Accu-Chek SmartGuide). During the unveiling, Chief Medical Officer Julien Boisdron of Roche Diabetes Care referred to it as “a solution more than a CGM.” He described how the solution, which consists of two programs and a sensor, aids in both data visualization and prediction.
A new era of possibility has dawned in diabetes management and its associated complications. These novel techniques present significant opportunities for treating the combined problems associated with diabetes and obesity. A class of drugs called glucagon-like peptide-1 (GLP-1) agonists is used to treat obesity and type 2 diabetic mellitus (T2DM). As mentioned in our article, “10 Best GLP-1 and Weight Loss Stocks to Buy Now,” by 2030, the GLP-1 market, driven equally by obesity and diabetes, is expected to reach $100 billion. Thirty million GLP-1 users, or around 9% of the US population, may be on the medication by 2030.
The latest KFF Health Tracking survey indicates that 12% of American adults claim to have used a GLP-1 medicine at some point. Over the last half-decade, patients with diabetes now account for 43% of GLP-1 prescription users, while 22% of patients with obesity or overweight diagnoses also take the treatment. Adults who have heard “a little” or “a lot” about these drugs have gone from 70% to 82% over the past year, while those who have heard “a lot” or “a lot” about them have increased from 19% to 32%.
However, there are now difficulties as a result of the increased demand for these diabetes and weight reduction medications. A potential “explosion in the unlicensed sale of medication online” was indicated by the National Pharmacy Association (NPA). Semaglutides under the brand name Ozempic help individuals with type 2 diabetes control their blood sugar levels, but in some countries, such as the US under the brand name Wegovy, they are also widely used to help patients lose weight.
NPA chairman Nick Kaye stated:
“Pharmacists remain deeply concerned that the current medicine shortages crisis could lead to an explosion in the unlicensed sale of medication online.”
With that said, here are the 7 Best Diabetes Stocks To Buy Now.
A pharmacist holding a box of Exenatide, used to treat type 2 diabetes.
Methodology:
We sifted through holdings of ETFs exposed to the diabetes care industry and financial media to form an initial list of 20 diabetes stocks. Then we selected the 7 stocks that had the highest upside potential and market caps above $2 billion. The stocks are ranked in ascending order of the upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
7. Abbott Laboratories (NYSE:ABT)
Analysts’ Upside Potential: 14.11%
Abbott Laboratories is a well-known health care company that deals with drugs, nutrition, medical equipment, and diagnostics. The company’s advanced continuous glucose monitoring, or CGM technology, the FreeStyle Libre, has allowed it to establish a substantial market share in the diabetes care industry. Patients and healthcare professionals have embraced FreeStyle Libre extensively for diabetes management, which has strengthened Abbott’s position as a leader in the diabetes care industry.
Abbott’s testing capabilities have historically resulted in considerable advances in share price during the COVID-19 pandemic. However, following the pandemic, the stock has primarily stagnated. In spite of this, Abbott continues to be a significant force in the healthcare industry by utilizing its capacity to expand breakthroughs across international borders. It has surpassed industry averages in all of its business segments because of this strategy, resulting in analysts’ optimistic forecasts.
In light of Abbott’s latest Q2 2024 report, Evercore ISI maintained an Outperform rating and a $120.00 price target. Despite a minor negative impact from foreign currency rates, the company’s base organic revenue growth rate, excluding COVID-related revenues, reached roughly 9.3%, in line with Wall Street estimates.
Abbott’s Medical Devices segment exceeded market estimates by 130 basis points, contributing significantly to the company’s sales increase. Remarkably, every Medical Technology subsegment exceeded predictions, with the exception of Vascular and Diabetes. Although overall performance in the diabetes care area was within expectations, the Libre system achieved organic growth of 20% YoY and added nearly 250,000 new users.
Abbott posted strong financial results, including adjusted diluted EPS of $1.14, which is higher than analysts’ projections by around 3%, and a better-than-expected full-year revenue outlook of 9.5%-10% organic growth. The adjusted diluted EPS forecast was increased to $4.61-$4.71.
However, Abbott’s stock fell as a result of a trial it recently faced regarding claims about its baby formula. Abbott was found by the Missouri jury to be liable for $495 million in damages and compensation, causing concerns among investors.
Nonetheless, Abbott’s designation as one of the best diabetes stocks to buy now is reinforced by its emphasis on creating and improving diabetes management solutions. There are 9 analysts who have collectively rated the stock as a “strong buy.” The average price target indicates a possible gain from the current stock price of $108.18 of 14.11%. Buy recommendations have been upheld by analysts from TD Cowen, Citi, and Wells Fargo.
Diamond Hill Select Strategy stated the following regarding Abbott Laboratories (NYSE:ABT) in its Q2 2024 investor letter:
“Abbott Laboratories (NYSE:ABT) is a diversified health care company with an extensive portfolio that spans medical devices, pharmaceuticals, nutritionals and diagnostics. With a substantial portion of its revenues generated internationally, emerging markets contribute about 40% of overall sales. We have always liked Abbott’s diverse mix of businesses and its fundamental growth prospects. The management team has consistently demonstrated skill in capital allocation, highlighted by strategic divestitures such as the European generic business in 2014, and significant acquisitions like St. Jude in 2016.”
6. Merck & Co., Inc. (NYSE:MRK)
Analysts’ Upside Potential: 17.84%
Merck & Co., Inc. (NYSE:MRK) is a global provider of healthcare services. It is divided into two business segments: animal health and pharmaceuticals. Since the FDA approved Januvia in 2006, the type 2 diabetes medication has brought in $50 billion for Merck through 2023.
The combined sales of the diabetic medications Januvia and Janumet, which are similar, were over $75 billion in 2023, but the revenue is falling. Diabetes sales have significantly decreased in Q2 2024 YoY, dropping by 24.82%. Lower prices and demand in the United States, along with continued generic competition in many overseas markets, especially in Europe and the Asia Pacific regions, are the main causes of the drop in sales.
At this point, at least, the focus of efinopegdutide’s Phase 2 research is non-alcoholic steatohepatitis (NASH) rather than diabetes. As an oral medication, Merck may have an advantage over injectable drugs from Lilly and Novo. Dean Li, Merck’s president of research, states that the drug has shown a “significant reduction in liver fat and also gives a weight loss of 10% to 12%”. This medicine has the potential to become a diabetic drug blockbuster as well if approved.
The promising pipeline and high analyst opinion support Merck & Co., Inc. (NYSE:MRK) as a solid investment opportunity. Leerink Partners’ Daina Graybosch upholds a Buy recommendation. Merck’s pipeline shows great potential, especially in the small cell lung cancer (SCLC) segment, despite recent difficulties with TIGIT studies and the fixed-dose combo strategy for Keytruda. Important advancements include MK-6070 and ifinatamab deruxtecan, which should facilitate quicker approval procedures and aid in the expansion of the company’s operations.
In an effort to safeguard a portion of Keytruda sales from potential erosion by biosimilars, the subcutaneous formulation of Keytruda is viewed as a crucial life-cycle management tactic. This strategy, together with focused attention on unique assets within the TIGIT market, shows Merck’s strategic insight in preserving its competitive advantage in immuno-oncology.
In line with this view, Jefferies has assigned a Buy rating with a $150.00 price target, indicating even more confidence in Merck’s long-term prospects.
However, Merck’s stock has dropped 8.69% from $125.45 to $114.55 in the last six months, suggesting investor uncertainty about the company’s near-term prospects. This drop illustrates the possible dangers of Merck’s reliance on Keytruda, especially in light of growing competition and threats from biosimilars.
Carillon Eagle Growth & Income Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its first quarter 2024 investor letter:
“After posting lackluster returns in 2023, Merck & Co., Inc. (NYSE:MRK) got off to a strong start in January by raising the long-term sales forecasts for its oncology and cardiology pipelines and reporting solid fourth-quarter results, coupled with strong financial guidance for 2024. Merck shares also finished the quarter strong after receiving U.S. Food and Drug Administration approval in late March for a new cardiology medicine with the potential to contribute significantly to sales growth over the next several years.”
Despite difficulties in the diabetes segment, Merck & Company (NYSE:MRK) has promising growth potential due to its oncology pipeline. Analysts are bullish on the stock. The average target price set by 12 analysts is $134.58, which is a 17.84% increase from the current stock price of $114.21.
5. Insulet Corporation (NASDAQ:PODD)
Analysts’ Upside Potential: 19.10%
Insulet Corporation (NASDAQ:PODD), the global pioneer in tubeless insulin pump technology with its Omnipod brand of products.
A major decline in the stock price of Insulet Corporation (NASDAQ: PODD) occurred in 2023 as a result of worries about how the market for insulin pumps would be impacted by GLP-1 weight loss medications. Nevertheless, the CEO of Insulet believes that GLP-1 drugs are increasing the adoption of insulin, not decreasing it, suggesting a positive impact on the integrated continuous glucose monitoring (iCGM) industry.
In response to optimism surrounding the excellent success of its Omnipod insulin delivery devices, Insulet Corp (NASDAQ: PODD) increased its projection for annual sales growth. The company raised its earlier expectation of 14%-18% annual revenue growth to 16%-19%. In particular, sales growth for the Omnipod category is predicted to be between 18% and 21%, above previous estimates of 15%-19%.
Notwithstanding these encouraging results, worries about unused inventories caused the stock to drop by 3.5% in extended trading. In Q2 2024, the company disclosed a $13.5 million charge associated with this inventory, resulting in a roughly 280 basis point decline in gross margins. Furthermore, Insulet’s $0.55 adjusted profit per share fell short of analysts’ $0.56 projections.
Insulet’s outstanding revenue performance, with total Q2 revenue of $488.5 million exceeding the expected $463.09 million, shows high demand for its Omnipod devices.
Jeff Johnson of Robert W. Baird maintains Insulet at a Buy rating with a $238.00 price target. On August 8, Leerink Partners’ Mike Kratky reaffirmed his buy recommendation with a $240 price objective. With a “Buy” rating, the average 12-month price objective for Insulet stock, as estimated by 16 analysts, is $230.5. The average target suggests a 19.47% rise from the current stock price of $192.9.
ClearBridge Select Strategy stated the following regarding Insulet Corporation (NASDAQ:PODD) in its first quarter 2024 investor letter:
“Within health care, Insulet Corporation (NASDAQ:PODD) reported solid fourth quarter results that topped estimates but was hurt by weaker full-year guidance and poor communication by management. The maker of insulin pumps for diabetes patients could face increasing competition in the second half of the year.”
In conclusion, Insulet’s increased revenue outlook indicates the company’s confidence in the market position of its primary product. However, given the inventory issues and slight earnings miss, caution may be advised as the PODD deals with potential headwinds in the diabetic market.
4. Pfizer Inc. (NYSE:PFE)
Analysts’ Upside Potential: 20.03%
Pfizer Inc. is a global company that finds, develops, produces, promotes, distributes, and sells biopharmaceutical pharmaceuticals in Europe and the US. In a recent, late-stage study involving four groups of people with weakened immune systems, PFE’s respiratory syncytial virus (RSV) vaccine Abrysvo produced a robust immunological response.
Positively, Pfizer Inc. (NYSE:PFE) has made notable progress in reducing expenses. The company expects to generate $4 billion in net cost reductions by 2024 and plans to cut its cost of goods sold (COGS) by $1.5 billion by 2027. It is anticipated that the emphasis on cost reduction and manufacturing efficiency will boost margins, as seen by the revised price goal and increased EPS projections for 2025.
The annual profit forecast raise is supported by robust sales in Q2 2024 of its medication for heart disease and cancer therapies acquired through a $43 billion transaction for Seagen, even as the company suffers with a significant decline in revenue from COVID-19 products. The market for Pfizer’s COVID-19 vaccination and therapy has fallen by billions of dollars annually.
As COVID fears subsided, investors abandoned Pfizer, and the company’s shares are now trading at around half their peak during the pandemic.
However, Pfizer is also moving forward with its pipeline for obesity treatment and next-generation vaccines, even though important efficacy and tolerability data are still awaited. Pfizer Inc. (NYSE:PFE) recently confirmed that it will proceed with the development of danuglipron, an oral tablet that acts as a GLP-1 agonist and is used to treat weight reduction and diabetes. This action is a result of the twice-daily formulation’s Phase 2 trial meeting effectiveness targets despite a high rate of patient withdrawals owing to adverse effects. A notable improvement is that there is no indication of liver damage with the once-daily form of danuglipron.
On the other hand, Leerink Partners analyst David Risinger’s Hold recommendation points out concerns about Pfizer’s long-term growth forecast, despite the positive developments. Due to the loss of exclusivity on a few major products like Pfizer-BioNTech COVID-19 Vaccine, the company’s long-term EPS growth is expected to drop by 3%, which will dampen expectations for strong price appreciation, per the analyst.
Analyst Chris Schott of J.P. Morgan stated that he anticipates Pfizer’s stock to stay in the current range because of its competitors’ higher expectations and the company’s slowing revenue growth.
“We believe stronger new launch performance and/or further progress on the pipeline will be necessary to significantly change the narrative,” he stated in a research note.
Parnassus Value Equity Fund stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
PFE is one of the best diabetes stocks to buy now since it has promising growth potential, as seen by Truist Financial analyst Sriripa Devarakonda and Chris Shibutani of Goldman Sachs’ “Buy” rating on PFE given July 31. Overall, according to 13 analysts, PFE has a consensus Buy rating with an average price target of $34.54 and an upside potential of 19.72% from the current stock price of $28.85.
3. Tandem Diabetes Care, Inc. (NASDAQ:TNDM)
Analysts’ Upside Potential: 26.80%
The global insulin delivery and diabetes technology provider is Tandem Diabetes Care, Inc. (Nasdaq: TNDM). It has Tandem Mobi and t X2 insulin delivery systems. These pumps are software-updatable via personal computers, have variable infusion set options, and use management-IQ technology for better glycemic management. Tandem’s pumps are compatible with several CGM sensors, offering a complete AID solution for the management of insulin-dependent diabetes.
According to Tandem, the t: slim system now interfaces with three different brands of sensors, a first for the industry. The Mobi system now has better wearability and can function without a smartphone controller. Tandem offers a variety of add-on services and solutions, including decision support, reordering, reporting, and platform connection.
Tandem claims to have over 450k clients across 25 countries in a recent business presentation. This is referred to as a “scaling renewal opportunity” and is based on verified customer satisfaction. More customers equals more renewal opportunities, which adds to the new customers drawn each quarter, creating a “virtuous circle” situation.
Following the release of its impressive second-quarter results and an increase in its full-year sales expectations, Tandem Diabetes Care, Inc. (NASDAQ: TNDM) witnessed a significant 24% spike in its share price.
Analysts had predicted a loss of $0.54 per share for the company’s second quarter of 2024, but the actual loss was $0.47 per share. The quarter’s revenue of $221.9 million is above the consensus estimate of $205.63 million, indicating 13% year-over-year growth. Strong demand for Tandem’s most recent insulin delivery technology, the Tandem Mobi in particular, which has dramatically increased its market share, was the main driver of the company’s excellent financial performance.
While overseas pump shipments decreased 6% to around 10,000 units, Tandem supplied over 20,000 insulin pumps in the U.S. in Q2 2024, a 33% sequential increase from Q1 2024.
Tandem increased its sales estimate for the entire year 2024 to $885-892 million, above the $868.6 million analyst consensus and prior forecasts. In addition, the company expects revenue for the third quarter of $222-225 million, which is higher than the $220.4 million consensus forecast.
TNDM is one of the best diabetes stocks to buy now since it has received a “strong buy” recommendation from 12 analysts. TNDM has an average Wall Street analyst price target of $52.75, indicating an upside potential of 26.80% from the company’s current $41.60 price.
2. DexCom, Inc. (NASDAQ:DXCM)
Analysts’ Upside Potential: 51.58%
The goal of the medical device firm DexCom, Inc. (NASDAQ:DXCM) is to design, develop, and market continuous glucose monitoring (CGM) devices both domestically and abroad. The company sells its systems to healthcare professionals and individuals with diabetes.
The US Food and Drug Administration approved Dexcom’s latest over-the-counter CGM, Stelo, for use in March, the company reported. Patients with Type 2 diabetes who do not take insulin are intended to use Stelo.
On July 26, Dexcom, Inc. (NASDAQ:DXCM) saw its worst-ever decline as its shares fell more than 40% to finish at $64, wiping out more than $17 billion in market capitalization. The sharp drop followed the company’s release of less optimistic second-quarter earnings and expectations for the balance of the year. This was the worst one-day decline since September 2017, when the stock dropped 33% in a single day.
The diabetes treatment company, well-known for its continuous glucose monitors (CGMs), witnessed a 15% YoY increase in revenue in Q2 2024 to $1 billion. However, the total revenue was less than analysts’ projections of $1.04 billion. The main source of worry for investors was Dexcom’s updated revenue projection, which was previously expected to be between $4.20 billion and $4.35 billion. Instead, the company now projects revenue for the third quarter of $975 million to $1 billion and $4 billion to $4.05 billion for the entire year.
CEO Kevin Sayer blamed the losses on a poor reorganization of the sales force, fewer new clients than projected, and a decline in revenue per user. The company also encountered difficulties with the G7 CGM’s rebate structure and its durable medical equipment (DME) channel.
JPMorgan reduced its rating on Dexcom’s shares from buy to hold, noting the company’s “sharp turn in the wrong direction” and raising doubts about whether internal problems were more likely to be the cause than outside variables like the growing popularity of GLP-1 weight loss medications. Despite the turbulence, analysts at Leerink and William Blair are optimistic about the company’s long-term prospects since they think the present problems are temporary and won’t likely affect its trajectory for its future growth.
Baron Health Care Fund stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its Q2 2024 investor letter:
“DexCom, Inc. (NASDAQ:DXCM) sells a continuous glucose monitoring device to help diabetics monitor their blood glucose levels. Investors reacted negatively to DexCom’s first quarter earnings report, which missed revenue estimates. In addition, year-over-year comparisons will be even tougher to beat in the yet-to-be-reported second quarter, and some investors appeared to interpret management commentary as trying to manage expectations due to the tougher comparisons and potential disruption from an increase in the sales force and reconfiguration of sales territories. We think these concerns are shortsighted and believe DexCom has a long runway for growth driven by increased adoption of its continuous glucose monitoring sensors. We are also optimistic about the launch of Stelo, an over-the-counter glucose sensor for Type 2 diabetics who are not on insulin.”
It is one of the best diabetes stocks to buy now since 17 analysts have given an average price target of $107.65 and an upside potential of 51.58% from the current stock price of $71.02. Analysts have rated DXCM as a “buy.”
1. Viking Therapeutics, Inc. (NASDAQ:VKTX)
Analysts’ Upside Potential: 98.90%
Following the news that its experimental weight reduction injection, VK2735, will move forward to a late-stage trial sooner than expected, Viking Therapeutics, Inc. (NASDAQ:VKTX) saw a 28% increase in share price on July 25. The biotech company based in San Diego has reached a noteworthy milestone as it gets closer to joining the profitable GLP-1 market, which is expected to reach $150 billion by the end of the decade, according to analysts.
Following the encouraging findings of a phase two study in February, Viking initially intended to carry out another mid-stage experiment. Surprisingly, in the most recent earnings call, CEO Brian Lian disclosed that the company would skip this step and go straight to a phase three trial, citing positive feedback from the FDA. This choice may shorten the development schedule for VK2735 by one year, and analysts are now projecting a possible 2029 launch into the market.
Viking Therapeutics, Inc. (NASDAQ:VKTX)’s rapid development puts it up against two big players in the market, including Eli Lilly and Novo Nordisk, whose GLP-1-based diabetic and weight loss medications have recently taken over the market over the past two years. The former’s stock fell more than 4%, and the latter’s price fell about 3% immediately following the announcement of the phase three trial.
In trials, VK2735 has demonstrated encouraging outcomes, with patients losing as much as 14.7% of their body weight in just 13 weeks. In addition, Viking intends to try a monthly dose schedule, which would be a more practical option than the current weekly treatments. The company is also working on an oral version of VK2735, which showed a 3.3% reduction in weight during early trials. Viking is ready for a significant year ahead of it as it gets ready for a meeting with the FDA in the fourth quarter.
However, Baron Health Care Fund stated the following regarding Viking Therapeutics, Inc. (NASDAQ:VKTX) in its Q2 2024 investor letter:
“Another source of weakness in the sub-industry was Viking Therapeutics, Inc. (NASDAQ:VKTX), whose shares pulled back after increasing nearly 300% in the prior quarter. Viking develops metabolic disease medicines with focus on diabetes/obesity and MASH (metabolic steatohepatitis, i.e., fatty liver). The company’s lead asset is VK2735, an injectable and oral version of a GLP-1/GIP combination weight loss medication that directly competes with Lilly’s Mounjaro/Zepbound. Both of Viking’s main assets appear to be more efficacious than their competitors’ in two exceptionally large revenue end markets. Viking’s stock detracted as biotechnology specialists have leaned into an alternative mechanism for obesity called amylin inhibition and don’t view the company as an attractive acquisition target (an opinion we disagree with). The recent rebalance of the well-known SPDR S&P Biotech ETF (XBI) also pressured Viking’s share price due to forced selling by many long/short strategies to reweight their positions.”
Nonetheless, it is the best diabetes stock to buy right now since nine analysts have collectively rated the stock as a “strong buy.” The average price target of $111.78 indicates a possible gain from the current stock price of $56.20 of 98.90%.
While we acknowledge the potential of the 7 Best Diabetes Stocks To Buy Now, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VKTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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