At this time last year, Senseonics (NYSE:SENS) was literally a penny stock, trading around 38 cents per share. Today, the stock is more than 800% higher and trading at approximately $3.45. That puts SENS stock a nickel below the consensus price target set by analysts.
Senseonics was one of many companies whose stock caught the eye of retail investors. With a low share price and high short interest, SENS stock has had its share of volatility. However, the floor continues to get higher. And if the company can get regulatory approval for a 180-day version of its continuous glucose management (CGM) system, the stock may see more upside.
My InvestorPlace colleague Mark Hake suggests that SENS stock may be worth between $4.03 and $6. I think that’s an appropriate target range, as the company has a disruptive product with its smartphone-connected, implantable continuous glucose management device. From current levels, that would represent a profit of between 17% and 74% for investors.
Pandemic Takes a Toll on Senseonics
The Covid-19 pandemic was difficult on medical device companies, especially small firms like Senseonics.
As coronavirus cases surged across the country, many medical facilities closed for all except the most urgent cases. And even for those that didn’t, a prevailing sense of fear caused many people to put off all but the most necessary medical treatment.
This resulted in a sharp drop in visits by patients wanting the Eversense 90-day CGM system, according to Senseonics President and CEO Tim Goodnow. Unable to access doctors’ offices and medical facilities, the company was also forced to halt sales of its CGM system to new diabetes patients and physician practices.
Furthermore, the pandemic caused the Food and Drug Administration to delay the review of Senseonics’ 180-day Eversense glucose monitor.
This year has been a different story, though. Management said they expect to see revenue potentially triple from 2020 levels as “substantial doubt” has been “alleviated.” And the company is working on two product enhancements that, with FDA approval, could make 2022 and beyond very rewarding for investors.
Recent News Bodes Well for Senseonics
The company’s Eversense CGM is FDA-approved for 90 days. A medical professional implants the device under the skin and, aside from a couple of finger-prick tests per day for calibration purposes, it provides constant monitoring of a patient’s glucose level. Because the system lasts 90 days without the sensor needing to be replaced, it is appealing to insurance companies.
With that in mind, the first product enhancement is a 180-day version of the Eversense CGM, called Eversense XL. The company has submitted a premarket approval supplement application with the FDA. On the company’s latest earnings call, management said it expects approval by the end of the year.
The second enhancement to the Eversense CGM would extend the duration to a full year, although approval for this is likely years away.
In July, the Centers for Medicare and Medicare Services said Medicare beneficiaries with diabetes could use any insulin along with continuous glucose monitor therapy to eliminate the need for testing four times per day. And on Sept. 13, Senseonics announced that the University Hospitals Accountable Care Organization (UHACO) in Cleveland, Ohio, now offers the Eversense CGM to its Medicare enrollees. It’s possible we could see more collaborations like this.
“The Eversense CGM system delivers industry-leading accuracy, an improved patient experience, and an array of unique features that afford people, especially those in the Medicare population, the opportunity to achieve improved health outcomes,” said Dr. Betul Hatipoglu, head of Endocrinology and Diabetes at UHACO.
The Bottom Line on SENS Stock
Senseonics is a highly speculative stock. Ultimately, the opportunity will come down to regulatory approval and, after that, getting the product into doctors’ offices.
Furthermore, SENS stock has a high level of short interest. As of Aug. 31, short interest stood at nearly 20%. I find this a little hard to reconcile since investors are not looking at a pre-revenue company. Senseonics has been growing revenue over the past several quarters, and this growth should accelerate quickly if the company receives FDA approval for Eversense XL.
I like the potential opportunity in SENS stock, but the level of short interest gives me pause. Risk-tolerant investors may eye dips in the stock as good buying opportunities.
On the date of publication, Chris Markoch 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.
Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.