Senseonics Holdings, Inc. (SENS) and Abbott Laboratories (ABT) are two established medical technology companies that manufacture and market healthcare products internationally. Both companies invest in the development of Continuous Glucose Monitoring (CGM) devices and introduce new models to gain significant market share. While SENS manufactures Eversense and Eversense XL-CGM devices, in addition to CGM and other medical devices, ABT also offers diagnostic products, nutritional products and pharmaceutical products.
Lifestyle changes, limited physical activity, and changed consumer preferences during the COVID-19 pandemic have contributed to a significant increase in both type 1 and type 2 diabetes cases in the United States. According to the American Diabetes Association, the number of Americans diagnosed with diabetes is projected to rise to 29 million by 2050. Therefore, the demand for therapies offered by diabetes care device manufacturers such as SENS and ABT is expected to continue to grow in line with the increasing incidence of the disease.
SENS grew 191.2% in the past year, while ABT achieved a return of 36.3% in this period. However, in terms of last month’s performance, ABT is the clear winner, up 4.9% over SENS’s negative returns. So which of these stocks is a better choice now? Let’s find out.
Click here to read our Health Sector Report for 2021
Latest moves
In February, Ascensia Diabetes Care began selling and marketing activities for the Eversense XL CGM system from SENS in Germany, Italy, the Netherlands, Poland, Spain and Switzerland as part of their strategic collaboration. The initiative should bring SENS ‘solution to a larger market and help the company grow.
In January, the company completed a public offering of 59.74 million common shares for $ 115.0 million. Proceeds from the offering will be used for product development, commercial launch of its 365-day product, and working capital.
Last month, ABT received Health Canada approval to expand the use of the FreeStyle Libre Flash glucose monitoring system for pregnant women in the hospital and professional healthcare setting. The device will be the only glucose monitoring technology in Canada to replace the traditional fingerprint system.
Current financial results
For the fourth quarter ended December 31, 2020, total SENS revenues were $ 3.9 million compared to $ 9.0 million in the fourth quarter of 2019. Gross profit increased $ 10.8 million year over year to $ 2.6 million. However, SENS recorded a net loss of $ 101.6 million compared to $ 35.6 million in the fourth quarter of 2019. Loss per share for that period was $ 0.41. The increase in net loss was due to an increase in expenses of $ 90.6 million, primarily due to non-cash accounting charges.
For the fourth quarter that ended December 31, ABT revenue increased 28.7% year over year to $ 10.7 billion. The company’s operating income increased 75% year over year to $ 2.43 billion, while net income increased 105.9% year over year to $ 2.16 billion. Earnings per share rose 52.6% year over year to $ 1.45.
Past and expected financial performance
ABT’s sales have increased by 8.1% over the past three years. In comparison, SENS sales declined by 8.1% on an annual basis during this period.
SENS sales are expected to grow 159.6% this year and 155.4% next year. However, a consensus-based EPS estimate shows a decrease of 66.7% in the quarter ended June 30, 2021. By comparison, analysts expect ABT’s sales to increase 21.9% in fiscal 2021. Additionally, the company’s EPS is expected to increase 121% in the next quarter.
profitability
ABT’s turnover after 12 months is significantly higher than that of SENS. Also, with a gross profit margin of 56.7%, ABT is more profitable versus SENS’s negative returns.
However, SENS’s ROE of 233.7% is cheap compared to ABT’s 13.9%.
rating
In terms of trailing 12-month price / sales, SENS is currently trading at 91.19x, 1336.1% higher than ABT, which is currently trading at 6.35x. His Forward EV / Sales of 74.32x is also significantly higher than ABT’s 5.40x.
So ABT is the cheaper share.
POWR ratings
ABT has an overall rating of B which is equivalent to a purchase on our proprietary POWR rating system. However, SENS has an overall rating of D, which translates into Selling. The POWR ratings are calculated taking into account 118 different factors, with each factor being optimally weighted.
In terms of growth rate, ABT has an A, which indicates higher growth potential. In comparison, SENS has a growth rate of B.
ABT has a B sentiment grade that is in line with analysts’ expectations for an increase in profits and sales. In comparison, SENS has a sentiment grade of F. In addition, ABT has a stability grade of B, while SENS has an F grade.
Of the 234 stocks in the medical / pharmaceuticals industry, ABT ranks 9th. SENS ranks 51st out of 58 stocks in the D-rated medical / diagnostics / research branch.
In addition to the grades we highlighted, our POWR rating system rated both ABT and SENS in terms of value, impulse and quality. You can find all ABT ratings here. Click here to see the additional POWR ratings for SENS.
The winner
As the incidence of diabetes increases in the US, both CGM device makers ABT and SENS are in a unique position to significantly increase their share of the diabetes care device market. However, ABT seems like a better buy based on the factors discussed here. ABT’s stock has more upside potential than SENS because it is much larger and has a much more diverse healthcare department that should allow it to weather financial setbacks and make solid profits in the short term.
Our research shows that betting on stocks with an overall POWR rating of Buy or Strong Buy increases the chances of success. Click here to find out more about the top rated stocks in the medical and pharmaceutical industries. Click here to access the top rated stocks in the Medicine – Diagnostics / Research industry.
Click here to read our Health Sector Report for 2021
ABT shares were trading at $ 123.41 per share on Friday morning, down $ 0.53, (-0.43%). Since the beginning of the year, ABT has gained 13.58%, while the benchmark index S&P 500 has risen by 11.76% over the same period.
About the author: Imon Ghosh
Imon is an investment analyst and journalist with a passion for financial research and writing. She started her career at Kantar IMRB, a leading market research and consumer advice organization. More…
