We recently compiled a list of the 7 Best Diabetes Stocks To Buy Now. In this article, we are going to take a look at where Insulet Corporation (NASDAQ:PODD) stands against the other diabetes stocks.
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.”
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)
A pharmacy worker placing wireless handheld personal diabetes managers against the light.
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.
Overall PODD ranks 5th on our list of the best diabetes stocks to buy. While we acknowledge the potential of PODD as an investment, 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 PODD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.