Sell Insulet, Empire Warns

Empire Asset Management issued a note on Insulet Corporation PODD after recent analysis of the company's core business capabilities, specifically its insulin delivery pump "OmniPod." Analysts initiated coverage of Insulet with a Sell rating and a $15 price target.

Analyst Dr. Cathy Reese wrote, "We expect that PODD will generate the majority of its future revenues from sales of its OmniPod technology platform. We believe that OmniPod System's revenues will not meet consensus future estimates, the company will be required to increase spending to keep pace with industry trends, OmniPod will not receive Medicare reimbursement in the foreseeable future..."

Analysts at Empire gave two reasons why they believe that sales of Insulet's OmniPod may be challenged in the near term.

1. Competition

Empire noted that while Insulet increased investments in marketing and branding, its competitors were investing in product innovations which could cause Insulet to lose market share as new companies enter the insulin delivery market. Empire also highlighted that with the shift of devices to automation, there may be better products than Insulet's OmniPod available.

2. Patient Retention Rate

Analysts at Empire wrote that Insulet's patient retention rate for Omnipod may fluctuate in the coming quarters, particularly as new devices enter the market. As Insulet's Omnipod is more expensive than other competitors' products, analysts are concerned that Insulet may lose pricing power as demand for its insulin delivery treatment may decrease.