Market Overview

4 Tailwinds Driving Raymond James' Insulet Bull Case

Share:
4 Tailwinds Driving Raymond James' Insulet Bull Case
Related PODD
Once Again, Baird Predicts End To Tandem's 'Fantastic' Run
The Daily Biotech Pulse: Advaxis Posts Narrower Loss, Endocyte Announces $175M Offering, Leadership Transition At Insulet

Raymond James identified four major tailwinds for Insulet Corporation (NASDAQ: PODD) that the firm said could help drive 20-percent-plus revenue growth over the next two years.

The Analyst

Raymond James analyst Jayson Bedford upgraded Insulet from Market Perform from Outperform with an $80 price target.

The Thesis

Share Gain Opportunity: Insulet is likely to benefit from a more favorable industry structure and share gain opportunity, Bedford said in a Monday note. (See the analyst's track record here.)

The 50,000 U.S. users left in the lurch following Johnson & Johnson (NYSE: JNJ)‘s exit from the insulin pump market will be seeking an alternative when their contracts expire, the analyst said.

Insulet is now operating in a three-player market, though it boasts only a 15-percent share of the U.S. pump market. Being the No. 2 player, Insulet can grow its market share for "many years," Bedford said. 

  • CMS Reimbursement: With Medicare reimbursement for the OmniPod likely imminent, Raymond James projects an incremental 300,000-plus user opportunity, assuming only Type 1 patients. It's a $1-billion market opportunity on the basis of Insulet's current service providers, according to Raymond James. 
  • Going Direct Internationally: Insulet's move to distribute directly provides another source of growth. This is despite Bedford conservatively assuming a sharp deceleration in new user additions. 
  • New Product Momentum: Raymond James said DASH, Insulet's new Bluetooth-enabled OmniPod and PDM, will be the first new product in five years. The company can exert some pricing power with DASH due to the favourable industry dynamics and its lower upfront cost business model, Bedford said. 

The Price Action

"If PODD can maintain its current 2018 forward multiple (7.7x sales) over the next year, the stock can trade into the low $80s," Bedford said. The shares have nearly doubled over the past year.

Insulet was trading up 10.44 percent at $75.94 at the time of publication. 

Related Links:

Abbott Labs Has 'An Emerging Picture Of Top-Tier Growth,' Says Morgan Stanley

FDA's 60-Day Extension For Medical Device Defects Not Likely Obstructive To Public Health

Latest Ratings for PODD

DateFirmActionFromTo
Jun 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
May 2018Canaccord GenuityMaintainsBuyBuy
May 2018BMO CapitalMaintainsOutperformOutperform

View More Analyst Ratings for PODD
View the Latest Analyst Ratings

Posted-In: Diabetes insulinAnalyst Color Upgrades Health Care Price Target Analyst Ratings General Best of Benzinga

 

Related Articles (PODD + JNJ)

View Comments and Join the Discussion!

Costco Looks Sound On Robust Comps, Growth Endeavors

Alzheimer's Takes Another Hit As Pfizer Ends Research In The Area