I am neutral on Senseonics Holdings (SENS) because Wall Street’s bullishness on the stock and its strong growth potential are offset by its lack of profitability and speculative nature.
Senseonics Holdings is a medical device and technology company based in Germantown, Maryland. The company is involved in the design, development, and marketing of implantable, long-term glucose monitoring systems, sensors, smart transmitters, and medical apps, which can help people manage diabetes.
See Senseonics stock charts on TipRanks >>
Strengths
Senseonics made good progress by creating increased awareness of Eversense in patients and providers. Eversense is an under-the-skin glucose monitor. The company produced a direct-to-consumer digital advertising campaign, showing results of the PROMISE Study, which evaluated its 180-day sensor. The company believes that the strong data in the study represents a top-tier CGM (continuous glucose monitoring) safety and accuracy profile.
Additionally, in collaboration with its partner, Ascensia Diabetes Care, the company launched a patient assistance program that would reduce out-of-pocket expenses for 200 million covered patients.
Recent Results
Senseonics’ announced revenue of $3.29 million in its second quarter report of 2021. United States revenue was $0.98 million while international revenue was $2.31 million, showing massive year-over-year growth from $0.26 million.
The report also revealed that the gross profit for the second quarter increased by $1.54 million year-over-year, partially due to order fulfillments using existing inventory that had been written off because of the global pandemic.
Furthermore, Senseonics’ sales and marketing expenses in the second quarter of 2021 decreased by $1.50 million year-over-year to $1.64 million due to its go-to-market strategy changes, made in partnership with Ascensia.
On the other hand, research and development expenses increased from $3.31 million to $7.11 million year-over-year. Senseonics reported that the increase was due to clinical study costs, stock-based compensation and other personnel-related expenditures.
The company experienced a net loss of $180.3 million or a loss of $0.42 per share in its second quarter of 2021, a serious increase over its net loss of $7.52 million or $0.03 loss per share, year-over-year.
For the full fiscal year 2021, Senseonics expects a global net revenue between $12 million and $15 million.
Valuation Metrics
Senseonics’ stock is very difficult to value right now, given that it is still running up significant losses. That said, the stock is trading at 76 times forward sales expectations, while sales are expected to grow by 183% in 2021 and 133.7% in 2022.
As a result, Senseonics’ valuation largely hinges on whether or not its can continue to grow rapidly to a point where its profit margins can finally turn positive and the company can generate profits. However, it is unlikely to achieve profitability anytime soon.
Wall Street’s Take
From Wall Street analysts, Senseonics earns a Moderate Buy analyst consensus based on 3 Buy ratings, 2 Hold ratings, and 0 Sell ratings in the past 3 months. Additionally, the average Senseonics price target of $4.13 puts the upside potential at 18.3%.
Summary and Conclusions
Senseonics is a rapidly growing company that has a lengthy growth runway. Furthermore, the company’s mission to improve is certainly desperately needed, as it will reduce patients’ medical costs while also improving healthcare quality if successful. Last, but not least, Wall Street analysts are generally bullish on the stock at current levels and their consensus price target implies decent upside over the next year.
That said, the company is still a long way from achieving profitability, so any investment in the company right now is highly speculative. While the company’s growth implies that it certainly has the potential to be a great investment, investors should keep the speculative nature of the investment in mind before purchasing any shares.
Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.
