Top Med Tech Stock with Ambitious Valuation

Insulet

Founded in 2000, Insulet (NASDAQ:PODD) is a U.S. medical technology company which has developed an innovative alternative for the administration of insulin for diabetics. The Omnipod Insulin Management System ensures continuous insulin delivery without a needle.

90% of the company’s revenue comes from the Omnipod system. Revenues are steadily increasing as Insulet continues to expand its customer base. Each new version of the system (there are now five) makes it more convenient for patients to use and expands the advantages over conventional insulin administration.

Advantages Over Conventional Insulin Administration

Studies have demonstrated the advantages of Omnipod insulin pump therapy over multiple daily insulin injections. These include better blood glucose control, fewer hypoglycemic events, less fluctuation in blood glucose levels. Also it provides a better quality of life without having to inject insulin regularly.

Omnipod is also superior to conventional insulin pumps. Improvements include no tubing, automatic, virtually painless insertion, and two straightforward parts that communicate wirelessly.

In addition, the company is increasingly positioning Omnipod as a system for administering medications outside the diabetes arena. This allows drugs to be administered in the correct dosage over a period of several days. It also dispenses under the skin (subcutaneously) without the need for a needle insertion.

Continuous Growth – Profits Still Relatively Low   

For years, Insulet Corporation has achieved stable annual growth rates of around +20%. From 2017 to 2022, the company has almost tripled its sales. The forecasts for 2022 assume sales of around $1.3 billion. And chances are very good that this respectable growth rate will continue for several more years. 

The profit trend isn’t quite as impressive. Insulet has been in the black for a number of years, but until this year profits were very low. They plan for 2022 to be the first year that annual profits exceed the one U.S. dollar per share mark. With a share price of more than 260 euros, the stock still has a P/E ratio of just under 200.

Insulet Must Continue to Grow to Justify Valuation

Insulet is a typical growth stock. As long as the company continues to deliver strong financials and exceeds forecasts where possible, the stock’s upward trend should continue. However, if there are any disappointments, the share price can drop significantly relatively quickly. As an investor, you should therefore be prepared to take a certain amount of risk here.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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