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Why Diabetes Stock Insulet Fell 13% in March

By Beth McKenna – Updated Apr 6, 2020 at 5:47PM

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Despite last month's decline, shares of the leader in tubeless insulin pump technology are significantly outperforming the market in 2020.

What happened

Shares of Insulet (PODD -0.77%), which makes a tubeless insulin pump, declined 12.8% in March, according to data from S&P Global Market Intelligence. The S&P 500 index returned negative 12.4% last month.

Insulet stock has moved 3.6% higher this month through Monday, April 6. The broader market has returned 3.1% so far this month.

The healthcare stock was a huge winner last year, gaining 116%, compared with the S&P 500's 31.5% return. While it's early in 2020, shares are on track to outperform once again. So far this year, through April 6, they've eked out a 0.3% gain. While that's meager, to say the least, it's much better than the S&P 500's negative-17.1% return over this period.

(In October, I chose Insulet as one of "three stocks poised for huge growth over the next decade.")

A two-pane image with the top pane showing an Omnipod attached to a woman's lower stomach and the bottom pane showing the handheld control for the device.

Image source: Getty Images.

So what

We can safely attribute the stock's decline last month to simply being due to the overall market sell-off.

The company continues to generally churn out strong quarterly results, though it did have a rare earnings "miss" last quarter.

In the fourth quarter of 2019, reported in late February, revenue jumped 27% year over year to $209.4 million, sailing by the Wall Street consensus estimate of $195.5 million. Earnings per share fell 50% to $0.08. The decline was no surprise, as it was expected, because the company is investing in growth initiatives. Notably, it's ramping up capacity at its new manufacturing facility in Massachusetts. That said, Wall Street wasn't expecting the decrease to be as steep, as analysts had been modeling for EPS of $0.11.

Now what

In the first quarter of 2020, management expects revenue growth of 17% to 20% year over year. And it projects full-year 2020 revenue will increase 14% to 18% over 2019. The company doesn't provide earnings guidance.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends Insulet. The Motley Fool has a disclosure policy.

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Insulet Corporation Stock Quote
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$229.40 (-0.77%) $-1.78

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