Healthcare is considered a recession-proof industry as people rarely delay medical expenses. Most governments are also trying to prioritize health spending to make this sector even more relevant.
Next is that Demand for Diabetes Products continues to rise as falls rise all over the world. According to a report by the World Health Organization, around 422 million people worldwide have diabetes, and the disease causes 1.6 million deaths each year.
With these factors in mind, today I’m going to analyze two diabetes stocks, Senseonics (IMPORTANCE) and tandem diabetes care (TNDM) to find out which stock is a better buy.
Senseonics
Senseonics is a medical technology company that develops and markets continuous glucose monitoring (CGM) systems for people with diabetes in the United States, Europe, Africa, and the Middle East. Products include Eversense and Eversense XL, which are CGM implantable systems. These products can measure blood sugar levels in people with diabetes and serve health care providers and patients through a network of medical vendors and compliance partners.
Senseonics stock trades at $ 3.62 per share and is up 18% today. Since the beginning of June 2020, the stock has gained an impressive 69% encouraging results from clinical trials from studying his CGM system. The study examined the company’s Eversense CGM system in patients over a six-month period, with hypoglycemic alert detection rates being 93% for the primary sensor and 94% for the secondary sensor.
Millions of people in Senseonics’ key markets have type 1 diabetes, which requires constant monitoring of blood sugar levels. The company’s 180-day sensor is now awaiting approval in the US and will be a key revenue driver for the company.
While Senseonics has forecast sales of $ 15 million in 2021, it expects sales to grow between $ 150 million and $ 200 million through 2025 rated with market capitalization of $ 1.56 billion, suggesting its price-to-sales multiple of 104x is sky high. But you need to look at exponential sales growth in the future before making any investment decision.
Tandem diabetes care
Another company for medical devices in the diabetes sector is Tandem. It develops and markets products for patients with insulin-dependent diabetes in the United States. Tandem Diabetes Care also provides a data management application that provides users with a visual way to view diabetes therapy management data, CGM, and assisted blood glucose meters.
In the fourth quarter of 2020, the company reported revenue of $ 168 million, up 55% year over year. Tandem delivered 32,685 pumps in the fourth quarter, 67% more than in the same period of the previous year. In 2020, sales soared 38% to nearly $ 500 million.
In the first quarter Top-line growth was a staggering 44% when the company’s revenue rose to $ 141 million. Tandem delivered 25,353 pumps in the first quarter, an increase of 46% over the previous year. At 2% of total sales, the operating loss was well below the previous year’s value of 14%.
Valued at a market cap of $ 5.6 billion, Tandem analysts expect sales to grow 28% to $ 637 million in 2021. This will also make it possible to improve profit margins from a loss of $ 0.56 per share in 2020 to earnings of $ 0.15 per share in 2021 Sales could increase 18% in 2022, profits are expected to increase by 320%.
The judgment
We can see that Senseonics and Tandem Diabetes Care continue to be standout favorites for growth investors, poised to beat the broader markets in 2021 and beyond. These companies should continue to experience strong product demand across business cycles, which will allow them to drive sales growth and improve profit margins in the future.
While Senseonics is significantly more expensive compared to tandem, the former is also growing exponentially. Senseonics’ latest test results are more than encouraging, which leads me to believe it is the better stock right now.
The SENS share rose in after-hours trading on Thursday by USD 0.31 (+ 8.56%). Since the beginning of the year, SENS has gained 315.23%, compared to a 13.67% increase in the reference index S&P 500 in the same period.
About the author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes on economics, public stocks, and personal finance. His work has been published on multiple digital platforms in the US and Canada, including The Motley Fool, Finscreener, and Market Realist. More…
