Shares of medical device maker Senseonics (NYSE:SENS) have been rallying in the past month. SENS stock has generated over 90% return since mid-May. Positive study results from its glucose monitoring system and an elevated short interest propelled the stock to new highs.
There’s no denying the potential of its glucose monitoring systems, but it’s best to wait for a pullback before investing in SENS stock.
Senseonics specializes in the development of implantable glucose monitoring diabetic patients. It recently released results from an internal study, which showed that its Eversense system showed a hypoglycemic alert detection rate of over 90% for both its primary and secondary sensors.
According to estimates, the market for Contour Glucose Management (CGM) is likely to surpass $12 billion by 2026. Hence, despite the competition in the sector, there is enough depth in the market for Senseonics to generate a massive amount of revenue.
Let’s look at Senseonics in a little more detail to assess its prospects.
Ascensia Diabetes Care is a major name in the global diabetic care market. With its agreement with Senseonics, it will handle the distribution of the company’s Eversense XL device in Europe and sales support. Moreover, Eversense is currently the only CGM product that the Food and Drug Administration has approved for use in the U.S.
The opportunity for Senseonics is incredible if it comes to fruition. Ascensia has the expertise and experience that will enable the company to establish its presence in Europe.
The Swiss company was established back in 2016, and it has been fixated on improving the lives of diabetic patients. It has several noteworthy alliances with major health care companies, including Medtronic (NYSE:MDT). For example, it is working with Medtronic in developing and supplying CGMs that connect to MiniMed Paradigm and 6 Series Pump systems for insulin dosing.
Competition and Financial Positioning
Few CGM devices are currently prevalent in the U.S. market from Abbott (NYSE:ABT), Medtronic, and DexCom (NASDAQ:DXCM). Senseonics has the edge over its competition by being the first long-term implantable glucose monitor.
The Eversense device sensors can remain in place in place for close to three months, which comfortably exceeds the typical wear time of three to 14 days. Additionally, with stronger product and expansion marketing efforts in the European market and the growing U.S. market, Senseonics could witness double-digit growth in the long run.
From a financial standpoint, the company appears to be moving in the right direction. It generated revenues of $2.85 million, which grew over 7,000% on a year-over-year basis. Moreover, its cash and cash equivalents are at a healthy $178.6 million, with outstanding indebtedness at $110.6 million.
Looking ahead, Senseonics expects revenues to fall in the range of $12 million to $15 million. Therefore, the company has a fantastic growth runway ahead in the fast-growing diabetes market.
Final Word On SENS Stock
SENS stock has been moving in the right direction in the past year, generating healthy shareholder returns. Senseonic’s Eversense CGM system is a robust product that could be a novelty in the diabetic care market. It has some unique features which give it the edge over its competition.
Moreover, the market’s sheer size is such that it has ample room for Senseonics to establish its position. Additionally, its efforts to grow its presence in Europe will also solidify its positioning in the market.
However, I feel it’s best to wait for a pullback before scooping up SENS stock.
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On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.