Here's Why You Should Hold On To Insulet (PODD) Stock Now

Insulet Corporation (NASDAQ:PODD) has been progressing well with respect to its four-pronged strategy and already seems on track to achieve revenues of $1 billion by 2021. The four key initiatives are expanding Omnipod’s market access, executing on its innovation roadmap, building the U.S. manufacturing facility and implementing its plan to sell directly in Europe. However, a tough competitive landscape and macroeconomic uncertainty are likely to offset the positives to some extent.

This $10.66-billion worth commercial developer of insulin treatment expects a skyrocketing earnings growth rate of 263.2% for next year. Also, the company has a trailing four-quarter negative earnings surprise of 145.8%, on average.

Let’s delve deeper into the factors that substantiate the company’s Zacks Rank #3 (Hold).

Advancement of U.S. Manufacturing Facility: Management seems to be particularly upbeat about the manufacturing unit in Acton, MA. The company is currently in process of installing its second U.S. manufacturing line with production of saleable items expected by mid-2020.

Insulet Corporation Price

Insulet Corporation price | Insulet Corporation Quote

Omnipod’s Market Access Expansion on Course: Insulet attained several milestones pertaining to extending Omnipod’s market reach. In this regard, the company has been consistently gaining traction from the full commercial launch of the Omnipod DASH system in the United States during early 2019. In the third quarter, it successfully expanded the Omnipod DASH’s coverage for commercial, Medicare and Medicaid beneficiaries. By the end of this period, the coverage was stretched to more than 50% of all Medicare beneficiaries.

Omnipod Horizon, a New Thrust Area: Insulet has been making progress with relation to its development roadmap of the Omnipod Horizon automated insulin delivery system. At the end of the third quarter, Insulet was in final stages of the Omnipod Horizon development and has likely started pivotals in the fourth quarter, so that the technology is ready to be introduced to the market by the second half of 2020. Insulet constantly supports Tidepool's innovation efforts with a focus on getting an open source, iOS-based loop app and algorithm approved by the FDA. The company is also collaborating to secure Omnipod’s FDA nod as a component of the Tidepool Loop automated insulin delivery system.

However, there are a few factors deterring the company’s growth prospects.

Economic Uncertainty Hampers Growth: Weaker global economic conditions may deflate demand for Insulet’s products, stiffen competition, exert pressure on prices plus dent supply and lengthen sales cycle. Insulet is also susceptible to the risk of reduction in healthcare spending in the United States, Canada and Europe due to an economic slump. We are particularly cautious as growth could moderate further if the economic scenario worsens.

Tough Competitive Pressure: 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, a division of Medtronic (NYSE:MDT). Notably, MiniMed captures major part of the conventional insulin pump market share in the United States. Other suppliers in the country include Tandem Diabetes Care, Inc.

Which Way Are Estimates Treading?

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 9 cents, calling for a 43.8% plunge from the prior-year reported number. The same for revenues stands at $197.8 million, indicating a rise of 19.9% from the prior-year reported figure.

The Zacks Consensus Estimate for 2019 earnings is pegged at 19 cents, suggesting 280% growth from the year-ago reported figure. The same for revenues stands at $726.8 million, implying a 28.9% improvement from the year-earlier reported number.

Stocks Worth a Look

A few better-ranked stocks from the broader medical space are Haemonetics Corporation (NYSE:HAE) , West Pharmaceutical Services (NYSE:WST) and Omnicell (NASDAQ:OMCL) . While Haemonetics sports 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 stocks here.

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

West Pharmaceutical Services has an expected long-term earnings growth rate of 14%.

Omnicell has a long-term earnings growth rate of 12.5%.

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