Marie Thibault, Alexandra Pang and Sam Eiber initiated MiniMed with a “Buy” rating following the Medtronic Diabetes business’ recent initial public offering (IPO), despite the IPO coming up short of its initial target price.
“Our MiniMed Group rating is buy,” the analysts wrote. “The company has a long history of innovation in diabetes technology and sells automated insulin delivery (AID) systems with continuous glucose monitors (CGMs) and smart insulin pens. The company has returned to high-single-digit revenue growth with sales of its 780G AID system and is poised for continued sales growth as it released its new Simplera/Simplera Sync CGM and has partnered with Abbott on the Instinct CGM that works with its AID platform.”
The analysts expect MiniMed to benefit from the breadth of its pipeline as the diabetes technology industry’s only “full-stack” company. It owns the CGMs, pumps, algorithms and software required to offer a complete AID system.
That portfolio includes the recently FDA-cleared next-generation Flex pump, plus the MiniMed Fit patch pump set to challenge that part of the diabetes tech market.
“MiniMed’s pipeline is full, with the MiniMed Go smart insulin pen system, the smaller MiniMed Flex tubed pump, and the MiniMed Fit patch pump all expected to be commercialized in the U.S. within the next two years,” the analysts wrote. “Though the diabetes technology segment is highly competitive, we view MiniMed as having a strong product pipeline and the global scale and reach to commercialize effectively.”
More on the analysts’ MiniMed outlook
The analysts describe the diabetes technology market as large and underpenetrated, setting up nicely for MiniMed to continue growth.
A full-stack pipeline, plus dual-DME and pharmacy licensing provide an advantage, the analysts say, while the company also makes its push into multiple daily injections (MDI) via MiniMed Go.
“We acknowledge the competitive intensity from other AID players, as well as regulatory and pricing risks, but believe MiniMed’s full-stack differentiation, global scale, and deep pipeline can allow it to sustain ~10% revenue growth and expand EBITDA margins from the midteens into the 20s over the coming years,” the analysts said.
Additionally, the next-generation pipeline described as “busy” includes a next-generation algorithm. The company said last month that it began a U.S. pivotal study for Vivera, its third-generation algorithm for AID. According to the analysts, the Fit patch pump and Vivera algorithm should broaden MiniMed’s addressable market and sustain growth.
Competition, regulatory challenges, pricing and market dynamics remain risks, the analysts say. However, they believe risks are manageable and recent milestones taking place ahead of schedule make the analysts optimistic about MiniMed.
“MiniMed does have clear differentiation vs. its peers, including being the only company that owns all the components of the AID, a patch pump design with a larger reservoir and longer wear time, and strong early clinical data on its next-gen Vivera algorithm,” the analysts said. “However, it will be important for the company to execute successfully on its new product launches in order to regain competitive footing in this fast-moving segment.”
BofA analyst opens coverage with ‘Buy’ rating, too
BofA Research Analyst Travis Steed also initiated his coverage of MiniMed, assigning a “Buy” rating as well.
Steed said the timing of the separation from Medtronic, plus the pipeline, sets the company up for growth.
“The split is timely given [MiniMed] is at an inflection with a pipeline to accelerate growth,” Steed wrote. “We think if [MiniMed] consistently executes on its plan out to FY30 the stock will work.”
Steed and BofA expect MiniMed to grow, thanks to CGM attachment rate driven by the Abbott partnership, plus the Flex and Fit launches.
“We view [MiniMed’s] current valuation… as attractive,” Steed wrote. “Risks are heightened competition as other pump companies innovate, pipeline delays, entanglement with [Medtronic] and changes to pricing/reimbursement.”
