BTIG analysts maintained their neutral rating for Embecta (Nasdaq:EMBC) ahead of the company’s fourth-quarter earnings report next week.
Embecta, the BD diabetes spinoff, reports its fourth-quarter earnings on Tuesday, Dec. 20. Analysts Marie Thibault and Sam Eiber also expect 2023 guidance to come from management then.
The analysts mainly expect the patch pump market to dominate discussions, given recent developments in the market. That includes Insulet’s November announcement that it developed a basal-only patch pump for type 2 diabetes. It expects to submit for FDA 510(k) clearance for that technology “soon,” according to company officials.
Additionally, Tandem Diabetes Care last week that it plans to acquire AMF Medical. Switzerland-based AMF Medical currently develops the Sigi patch pump and does not offer it commercially. The system received FDA breakthrough device designation just over one year ago.
Despite these developments, Thibault and Eiber wrote that they don’t expect new information on Embecta’s patch pump efforts.
“Any meaningful update on development stage or timelines for potential FDA submission would be a positive for EMBC shares, in our view,” they wrote.
The recent announcement of a co-promotional agreement with blood glucose monitor maker Intuity Medical represents a positive, they noted. Thibault and Eiber view it as “a complementary collaboration” overlapping Embecta’s core patient population. They expect to learn more about the company’s future approach to partnerships and potential M&A as well.
On average, analysts project adjusted earnings per share (EPS) to come in at 81¢ for the quarter. They anticipate revenues totaling approximately $277 million for Embecta. Expectations for adjusted EPS across 2023 come in at $311, with revenues at $1.1 billion. Thibault and Eiber said that, with healthy third-quarter results for a lot of medtech — including diabetes technology — a beat remains possible for Embecta.
Analysts take a firm stance on Embecta
Thibault and Eiber have exercised caution around Embecta in the past. In September, the analysts said the new company’s first quarterly results as a spinoff inspired early confidence, beating the consensus forecast on Wall Street. However, they aren’t jumping at the stock too soon.
BD initially announced plans to spin off its diabetes business in 2021 It finally completed the move in April 2022. With less than a year as a standalone company under its belt, analysts understandably expect things to move slowly. Thibault and Eiber said as much earlier this year, saying Embecta may take a few years to move into a growth phase.
“We expect this to be a multi-year transition from a value story to a growth play,” Thibault and Eiber wrote in September. They went on to point out that today’s investments in commercial programs and R&D initiatives “aren’t likely to materialize” on the company’s profits and losses out to fiscal 2024.
Embecta remains an interesting company to watch given that, while it is “new,” it brings a wealth of diabetes experience to the table. Earlier this year, Embecta CEO Devdatt Kurdikar told Drug Delivery News that the company is “uniquely positioned” in the diabetes space.
