BTIG Research initiated research of Insulet (NASDAQ:PODD) and Intersect ENT (NASDAQ:XENT) with “neutral” ratings. Shares of Insulet closed at $32.21 and shares of Intersect at $13.51 on Tuesday.
Analyst Sean Lavin writes that he sees Insulet’s core business as fairly valued at five times next 12 months revenue as both the major upside events and key risks are hard to forecast in terms of timing.
“We really like [Insulet’s] differentiated OmniPod for tubeless insulin delivery, the lower upfront costs, potential for new reimbursement, Type 2 diabetes opportunity, and the potential for drug delivery upside,” he added. “But we see near-term key risks, including competitive pump and app launches, international distribution risk, preferred partnerships with insurers, and Neulasta stocking potentially leading to slower drug delivery growth.”
However, he said there is a lot to like. OmniPod is the most well known tubeless pump, which offers the most convenient and discreet insulin option, he said, adding that the disposable nature allows for lower upfront costs.
Mr. Lavin said Intersect’s products likely improve outcomes in sinus surgery. “We feel they could become standard of care, but without data showing clear superiority versus standard of care and/or reimbursement to cover their costs, which will take time, we think adoption could be limited.”
In addition, “we expect further estimate reductions in front of the need for more capital will pressure shares, but feel shorts must worry about M&A.”
Intersect’s valuation for an innovative disposable device is quite low, he said, adding that large players have expertise in running trials and gaining reimbursement.
