Analyst Note| Debbie S. Wang |
Insulet’s strong first-quarter results were generally consistent with our top-line and bottom-line expectations, but earnings per share of $0.00 fell short of FactSet consensus of $0.06. Our longer-term assumptions for growth and gains in profitability that drive our free cash flow estimates haven’t changed, and we’re holding steady on our fair value estimate. Moreover, the firm is preparing for a major product launch in Omnipod 5, which will require increases in working capital and investment in the commercial organization which can throw profitability out of whack in the near term for Insulet, which only recently crossed over into the black. Omnipod 5, with its hybrid closed loop function and integration with the Dexcom continuous glucose monitor, is a major step forward for Insulet and demonstrates that this firm won’t be left behind in the dust as other key competitors push further into the realm of automated insulin delivery and control and monitoring through smart phones. This reinforces our view of Insulet’s narrow economic moat.