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3 Reasons to Hold Insulet (PODD) Stock in Your Portfolio

Insulet Corporation PODD is well-poised for growth in the coming quarters, backed by its build-out of U.S. manufacturing facility strategy. The solid performance in the second quarter of 2022 and Omnipod’s continued market access expansion also buoy optimism. Headwinds resulting from sole reliance on the Omnipod system and stiff competitive forces are major downsides.

Over the past year, the Zacks Rank #3 (Hold) stock has lost 11.4% compared with the 48.2% fall of the industry and 13.3% decline of the S&P 500.

The renowned developer, manufacturer and marketer of insulin delivery systems has a market capitalization of $17.99 billion. The company projects 33.3% growth for 2022 and expects to witness continued improvements in its business. Inogen’s earnings yield of 0.1% is favorable to the industry’s negative yield.

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Let’s delve deeper.

Build-Out of U.S. Manufacturing Facility: Management’s optimism about the manufacturing unit in Acton, MA looks promising. Insulet started production in its new highly automated manufacturing facility in Acton in 2019. Notably, the facility serves as the company’s new global headquarters. Insulet expects that, following start-up-related activities, the new facility will allow it to lower manufacturing costs, increase supply redundancy, add capacity closer to its North American customer base and support growth.

Omnipod’s Market Access Expansion Continues: Insulet has achieved several milestones with respect to expanding Omnipod’s market access, raising our optimism. During fourth-quarter 2021, Insulet launched the Omnipod DASH system in Australia and Turkey. Further, the Omnipod DASH was launched in the United Arab Emirates and Saudi Arabia markets in the second quarter of 2022. With this launch, the Omnipod is currently available in 24 countries worldwide.

Strong Q2 Results: Insulet’s better-than-expected revenues in second-quarter 2022 buoy optimism. The company’s performance benefitted from record quarterly U.S. sales and total Omnipod new customer starts. The full market release of the Omnipod 5 Automated Insulin Delivery System (Omnipod 5) in the United States instills optimism. The favorable study results backing the safety and efficacy of Omnipod 5 for type 1 diabetes are encouraging. The raised sales guidance for 2022 is indicative of this growth momentum continuing.

Downsides

Sole Reliance on Omnipod System: Insulet’s financial results continue to largely depend on the performance of its lead product — Omnipod System. Per the company, any adverse changes in the market acceptance of the product or worsening of the factors that negatively influence the sale will dent the company’s financials majorly.

Tough Competitive Pressure: Insulet operates in a highly competitive environment dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets where the company operates limit Insulet’s ability to switch to strategies like price increases and other drivers of cost increases.

Estimate Trend

Insulet has been witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 75.2% south to 32 cents.

The Zacks Consensus Estimate for third-quarter 2022 revenues is pegged at $312 million, suggesting a 13.2% improvement from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.

AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has lost 5.4% compared with the industry’s 36.4% fall in the past year.

ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.

ShockWave Medical has gained 25.1% against the industry’s 31.2% fall over the past year.

McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.

McKesson has gained 64.2% against the industry’s 15.8% fall over the past year.


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