IBD Stock Of The Day Insulet recently launched its newest insulin pump and, now, PODD stock is finding fresh support at its 50-day line.
The diabetes market is massive and growing, Insulet Chief Executive Jim Hollingshead said during the recent Morgan Stanley Global Consumer and Retail Conference. Insulet sells insulin pumps for patients with a genetic form of diabetes called type 1 and the progressive type 2 condition. These patients need additional insulin to keep their blood sugar in check.
Insulet's devices are body-worn insulin delivery systems. The company recently launched a new device for type 1 patients age 2 and up, dubbed Omnipod 5. Since the full launch in August, "it's growing like mad," Hollingshead said at the conference.
And now, PODD stock is poised to do the same. Shares just found support at their 50-day line, according to MarketSmith.com. Insulet stock is forming a flat base with a buy point at 320.10. The stock closed Thursday up 0.8% to 306.28.
PODD Stock: Two Decades Of Pumps
Omnipod's first insulin pump gained Food and Drug Administration clearance in 2003. In the two decades since, there have been four new generations of the Omnipod, culminating with the Omnipod Dash for type 2 patients in 2018 and the Omnipod 5 for type 1 patients in 2022.
The Omnipod 5 offers a paradigm shift for type 1 patients. It can be paired with Dexcom's G6 continuous glucose monitor, or CGM, to form something like an artificial pancreas. In people without diabetes, the pancreas is the body's insulin generator.
Readings from Dexcom's device tell the Insulet pump when to deliver a round of insulin. It's called a closed-loop hybrid system. Enthusiasm in the months since has driven PODD stock higher.
"So it automates all the delivery, completely eliminates the need for injection, self-injection of insulin," Hollingshead said.
Before insulin pumps, patients injected themselves with insulin multiple times throughout the day. That's a tricky proposition with children diagnosed with type 1 diabetes.
PODD stock investors are also watching Insulet's efforts in the type 2 diabetes realm. Many of these patients still rely on multiple daily injections of insulin. Insulet says they could, instead, use its Omnipod Dash system. The Dash device isn't automated in the same way as Omnipod 5. Patients have more control over when they ask the pump to deliver more insulin.
"They can give themselves a dose of insulin for mealtime," he said.
Differentiating From Rivals
There are competitors in the insulin pump space. Medtronic and Tandem Diabetes both make their own pumps that can be paired with glucose monitors.
But Hollingshead says there are "moats" around Insulet's business, keeping rivals at bay. First, Insulet's rivals sell their devices largely through the durable medical channel. Bullishly for PODD stock, Insulet's devices are available at pharmacies. This makes them easier to access for patients.
Insulet's devices are also disposable, which means they cost less for the patient. Further, these pumps are tubeless, so they're less cumbersome to wear, Hollingshead said. Tandem is working on its own tubeless device and a patch — similar to Insulet's Omnipod. Medtronic's MiniMed 670G is a tubed device.
"One of the big complaints about tube pumps is people will get it stuck on a doorknob or they have things like that," he said. "It's intrusive. You're wearing it maybe on your belt or maybe in your pocket. Ours is a small, very discreet, wearable thing. So the form factor is a huge moat for us."
Highly Rated PODD Stock
In a recent report, William Blair analysts said PODD stock was among their top picks for 2023.
"We like the outlook for names with strong underlying growth catalysts driven by innovation, which should be better able to muscle through potential macro headwinds," they said.
For the fourth quarter, analysts expect Insulet's profits to fall year over year, but they call for 8% sales growth to $332 million, according to FactSet.
But full-year profitability looks stronger, soaring 252% to 88 cents per share, on an adjusted basis. Sales are expected to have risen more than 15%.
PODD stock has a strong Relative Strength Rating of 93 out of a best-possible 99, according to IBD Digital. This puts shares in the top 7% of all stocks when it comes to 12-month performance.
This story has been updated to correct the spelling of Insulet CEO Jim Hollingshead's name.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
