Why Is Insulet (PODD) Up 14.3% Since Last Earnings Report?

A month has gone by since the last earnings report for Insulet (PODD). Shares have added about 14.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Insulet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Insulet Delivers Strong Omnipod Revenues in Q3

Insulet Corporation’s adjusted earnings per share of 9 cent in third-quarter improved significantly from the year-ago GAAP EPS. The reported figure also outpaced the Zacks Consensus Estimate of 3 cents. The quarter’s adjustment includes certain one-time, non-cash charge related to the extinguishment of the company’s 2021 convertible notes.

Revenues in the third quarter totaled $192.1 million, beating the Zacks Consensus Estimate by 7.4%. Moreover, the top-line figure jumped 27.1% from the year-ago number.

Insulet delivered third-quarter U.S. Omnipod revenues of $109.5 million, reflecting an increase of 34% year over year.

International Omnipod revenues of $67.7 million were up 35%.

The Drug Delivery business’ revenues totaled $14.9 million, down 21% year over year.

Margins

Gross profit in the reported quarter was $123.1 million, up 20.7% from the prior-year quarter. However, gross margin of 64.1% contracted 343 basis points (bps). Although total operating expenses of $106.1 million escalated 11.5% from the year-ago figure, the operating margin expanded 431 bps to 8.9% in the third quarter.

2019 Guidance

For 2019, the company has raised its revenue expectation to the range of $722 million to $730 million, from the prior estimate of $700-$715 million. This, in turn, suggests growth of roughly 28-29% from the level achieved in 2018 (earlier-expected growth rate was 24-27%). The Zacks Consensus Estimate for revenues is pegged at $710.2 million, below the guided range.

For the fourth quarter of 2019, Insulet projects revenues in the $193-$201 million band, indicating an increase of 17-22% from the year-ago reported number. The Zacks Consensus Estimate for the metric is pegged at $189.1 million, lower than the guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -22.77% due to these changes.

VGM Scores

Currently, Insulet has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Insulet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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