Despite a negative reaction from investors following a major buy in the insulin delivery space, analysts still back Insulet (Nasdaq:PODD) stock to perform.
Shares of PODD fell throughout today after Medtronic (NYSE:MDT) announced a $738 million acquisition of EOFlow. Korea-based EOFlow develops the EOPatch, a tubless, wearable and fully disposable insulin delivery device. Insulet represents a market leader in that space with its own Omnipod patch pump platform. Omnipod 5 became the first available tubeless, wearable, automated insulin delivery system after the FDA cleared it in January 2022.
By mid-afternoon, shares of PODD fell 7.3% to $272.24 apiece. Tandem Diabetes Care, another competitor in the space, saw its shares go down 5.5% to $26.62 apiece..
In spite of the negative reaction by the markets, BTIG analysts Marie Thibault and Sam Eiber expect Insulet to maintain its lead in the space. The analysts called the change in share prices “an overreaction.”
They also noted that Medtronic’s EOFlow play failed to come as a surprise, given rumors in Korea earlier this year establishing Medtronic’s interest.
“We are somewhat perplexed to see Insulet shares down nearly 8% in intraday trading, since we thought this was a known risk and expected competitive noise,” the analysts wrote. “We have followed EOFlow’s progress for more than five years and expected it to enter the U.S. market with a domestic distributor over the medium term.”
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