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The analysts told investors that given the underperformance in PODD on GLP-1 fears, they are “opportunistically upgrading” the stock.
“Previously, we had been Hold rated on PODD, primarily due to valuation,” the analysts wrote. “We have always liked PODD’s product offering, which is clearly winning share in the market due to an advantaged form factor with a disposable patch pump that is discreet and easy to wear on the body.”
They explained that the disposability also offers advantages in terms of PODD’s ability to offer diabetes patients “pay as you go,” allowing them to trial PODD for free, with no big upfront cost to start.
The analysts pointed to other positives of the disposable patch pump, stating they see the advantages as “relatively durable with PODD’s significant first-mover advantage in the patch pump arena.”
“Given the ~40% sell-off since SELECT data was released in August, PODD is now trading at 7x NTM sales, well below its historical average and at levels we view as relatively cheap,” the analysts added.
“While we think the multiple may not reach its prior peaks, over time we expect the stock to be catalyzed to the upside by continued strong growth from its annuity model and more evidence supporting the idea that PODD’s growth opportunity will not be materially crimped by GLP-1 or other weight loss drug use.”
