What happened
Shares of Insulet (PODD 1.23%) were sinking 9.3% as of 11:27 a.m. ET on Thursday after falling as much as 11.6% earlier in the session. The decline came as investors worried about the potential negative impact of new diabetes drugs on the sales of Insulet's insulin pumps.
Insulet CEO James Hollingshead stated in remarks at the Wells Fargo Healthcare Conference that glucagon-like peptide 1 (GLP-1) agonists could enable diabetic patients to hold off beginning insulin therapy. Several GLP-1 agonists are already on the market, including Novo Nordisk's Ozempic and Eli Lilly's Mounjaro.
So what
Investors already appeared to have concerns about Insulet even before Hollingshead's comments at the Wells Fargo conference. The healthcare stock has been hammered in recent weeks.
However, today's sell-off could be overdone. Hollingshead clearly stated that Insulet doesn't anticipate that the long-term market opportunities for its insulin pumps will be affected by GLP-1 agonists.
Insulet reported year-over-year revenue growth of 32.4% in the second quarter of 2023, driven by the success of its Omnipod insulin pumps. The company also raised its full-year revenue forecast.
Now what
The insulin pump maker should continue to have strong growth prospects as it launches Omnipod 5 in international markets. Insulet could also gain ground in providing insulin pumps for the type 2 diabetes market.
But with shares trading at a lofty forward earnings multiple of around 90, volatility should be expected with Insulet. Investors will definitely want to closely monitor the company's insulin pump sales to determine whether GLP-1 agonists have a significant impact.
