Insulet Stock Slumps on User Growth Concerns

Shares of Insulet (PODD) suffered the heaviest losses of any S&P 500 stock on Friday, dropping 8.8% after the maker of insulin management devices suggested new user growth could be lower than previously expected in the second half of 2024, despite topping second-quarter sales estimates.

Insulet reported diluted earnings of $2.59 per share on revenue of $488.5 million, growing from the year-ago period and exceeding analysts’ estimates compiled by Visible Alpha. Revenue gains were boosted by a 26.3% year-over-year jump in sales of the company’s Omnipod device.

However, adjusted earnings per share of 55 cents slightly missed expectations as the company recognized the impact of a $13.5 million charge during the quarter related to inventory it anticipates will remain underutilized.

User Growth Could Be Lower Than Anticipated

The company said it still anticipates users will grow in the second half of the year, though it suggested the pace of growth could be lower than previously anticipated, driven by a reduced number of patients switching from competing devices.

In a note released following the earnings report, Baird analysts said they heard concerns from investors about user growth, particularly in the U.S., but said Insulet could be poised to generate additional quarter-over-quarter improvements in global new patient starts this year.

Baird maintained an “outperform” rating and $238 price target for Insulet stock, highlighting the company’s increasing margin strength and potential for global sales growth.

The company raised its guidance for full-year revenue growth to between 16% and 19%, up from a previous range of 14% to 18%.

With Thursday’s losses, Insulet shares have fallen about 16% since the start of the year.

Insulet, the maker of insulin management devices, experienced a significant drop in its stock price after suggesting that new user growth may be lower than expected in the second half of 2024. Despite exceeding second-quarter sales estimates, the company’s shares fell by 8.8% on Friday.

The strong sales of Insulet’s Omnipod device contributed to the company’s revenue growth, which reached $488.5 million. This represents an increase from the previous year and surpassed analysts’ expectations. The company experienced a 26.3% year-over-year surge in Omnipod device sales.

However, Insulet’s adjusted earnings per share of 55 cents fell slightly short of expectations due to a $13.5 million charge related to underutilized inventory. This charge impacted the company’s overall earnings for the quarter.

Concerns About User Growth

Insulet still expects user growth in the second half of the year, but it anticipates a slower pace of growth than previously anticipated. The reduced number of patients switching from competing devices is believed to be the primary factor contributing to this potential slowdown.

Following the earnings report, Baird analysts noted that investors expressed concerns about user growth, particularly in the U.S. However, they also highlighted the potential for Insulet to generate quarter-over-quarter improvements in global new patient starts throughout the year.

Baird maintained an “outperform” rating for Insulet stock and set a price target of $238. They emphasized the company’s increasing margin strength and its potential for global sales growth.

Insulet has revised its guidance for full-year revenue growth, expecting it to be between 16% and 19%. This is an increase from the previous range of 14% to 18%, indicating the company’s confidence in its future performance.

Despite the recent losses, Insulet shares have experienced a decline of approximately 16% since the beginning of the year.

In conclusion, Insulet’s stock price took a hit after the company expressed concerns about lower-than-expected user growth in the second half of 2024. While the company’s second-quarter sales exceeded expectations, adjusted earnings fell slightly short due to a charge related to underutilized inventory. However, Insulet remains optimistic about its future growth potential and has raised its guidance for full-year revenue. Investors will be closely watching the company’s ability to attract new users and drive sales in the coming months.

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