A research report from the World Health Organization estimates worldwide diabetes cases at 422 million while the annual death count stands at 1.6 million. And it’s estimated that by 2045, 700 million people will suffer from this challenging disease.

The diabetes market size is projected to reach $2.8 billion by 2026. Therefore, it’s no surprise that companies that work on developing technology that treat diabetes are receiving attention from long-term investors.  

In this article I analyze two diabetes companies, Senseonics Holdings Inc. (SENS) and Insulet Corp. (PODD), to see which of their stocks is currently a better buy.

Senseonics Holdings

A medical tech company that develops and commercializes continuous glucose monitoring or CGM systems for people affected with diabetes in the U.S. and other international markets, Senseonics is valued at a market cap of $1.48 billion.

Its flagship products include Eversense and Eversense XL which are implantable CGM devices that can monitor glucose levels. Senseonics serves diabetes patients and healthcare providers through a robust network of fulfillment partners and medical distributors.

Since the start of 2021, Senseonics stock has gained close to 270% in market value. Despite these stellar returns shares are down 35% from record highs, providing investors an opportunity to buy the dip. The company’s Eversense CGM system was evaluated in patients for a six-month period where the hypoglycemic-alert detection rate was above 93% from both its primary and secondary sensors. These encouraging trial results have contributed towards the stock’s market-beating gains.

The sensors are now awaiting approval in key markets including the U.S. and might be a major revenue driver for Senseonics going forward. The company has forecast sales of $15 million in 2021 which is significantly higher compared to its sales of $4.95 million in 2020. It estimates the top-line to expand to between $150 million and $200 million by 2025 indicating exponential growth in the upcoming years.

Insulet

Trading at a market cap of $19.22 billion, Insulet is significantly larger compared to Senseonics. This stock has easily crushed the broader market and has returned 871% in the last five years and 1,350% since June 2011. It develops, manufactures, and sells insulin delivery systems for people with insulin-dependent diabetes.

The company’s Omnipod system is a self-adhesive tubeless device that is worn on the body for up to three days at a time while its wireless companion is a handheld personal diabetes manager. Insulet sells its products via a network of independent distributors as well as pharmacy channels in North America, Europe, and the Middle East.

In the first quarter of 2021, Insulet sales rose 27.4% year over year to $252.3 million. Omnipod revenue rose 23% to $233.3 million while drug delivery sales more than doubled to $19.1 million in Q1.

Wall Street expects Omnipod sales to rise by 20% year over year to $1.08 billion and by 20.6% to $1.31 billion in 2022. Comparatively, its earnings per share are forecast to rise at an annual rate of 111% in the next five years.

The verdict

It’s quite evident that the two companies discussed here are expanding at a rapid rate, allowing them to trade at a premium. Senseonics is valued at a forward price to 2022 sales of 45x while this multiple for Insulet is lower at 14.6x. However, Senseonics is also growing its revenue at a far higher pace.

Therefore, though both stocks are attractive from a growth perspective, Senseonics provides a higher risk-reward opportunity. Senseonics might remain volatile in the near term but it also has the potential to grow your wealth immensely in 2021 and beyond.

SENS shares were trading at $3.19 per share on Monday afternoon, down $0.27 (-7.80%). Year-to-date, SENS has gained 265.91%, versus a 12.68% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditya Raghunath

Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...

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