While the shares of Senseonics (SENS) have rallied over the past few months due primarily to the Reddit crowd’s interest in it, the stock now looks extremely overvalued at its current price level. So, we think it is better to bet on shares of Eli Lilly (LLY), Abbott (ABT), and Novo Nordisk (NYSE:NVO), which are dominant players in the diabetic care market and hold immense growth potential. So, let’s take a close look at these names. Shares of continuous glucose monitoring (CGM) system-maker Senseonics Holdings, Inc. (NYSE:SENS) have soared 254.6% over the past six months and 680% over the past nine months to close yesterday’s trading session at $3.12. The gains have been driven primarily by r/wallstreetbets subreddit’s interest in it and investors’ optimism surrounding the announcement of positive clinical results from its PROMISE study.
However, Wall Street analysts expect the stock to hit $0.88 in the near term, which indicates a potential 71.8% decline. This expectation is justified because its sky-high valuation is not in sync with its bleak growth prospects. In terms of forward EV/S and P/S, SENS is currently trading at 96.43x and 96.95x, respectively, which are much higher than the 7.10x and 7.86x industry averages. Its EPS is expected to remain negative in 2021 and 2022. So, we think it’s wise to avoid SENS now.
The global diabetic care market is expected to hit $41.71 billion by 2027, according to an Emergen Research report. More sedentary lifestyles amid remote working conditions and an aging population have been driving a significant increase in diabetic patients. According to SingleCare, roughly 700 million adults worldwide are expected to have diabetes by 2045. Against this backdrop, it could be wise to bet on shares of dominant companies in the diabetic care market Eli Lilly and Company (NYSE:LLY), Abbott Laboratories (NYSE:ABT), and Novo Nordisk A/S (NVO). Based on their fundamental strength and consistent innovations, all three are well positioned to capitalize on the growing demand for diabetic care solutions.