Tumbling to a price of $171.65 during today's afternoon trading session, shares of Insulet are now -40.75% below their average target price of $289.71. Does this mean the stock will reverse course? Analysts are giving PODD an average rating of buy and target prices ranging from 208.0 to 360.0 dollars per share.
The market seems to share this optimistic view, since Insulet has a short interest of only 4.8% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Insulet is to look at the percentage of institutions that are invested in the stock. In this case, 106.4% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is mixed market sentiment towards Insulet because of an analyst consensus of strong upside potential, a buy rating, an average amount of shares sold short, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about PODD:
It has trailing 12 month earnings per share (EPS) of $0.93 per share
Insulet has a trailing 12 month Price to Earnings (P/E) ratio of 184.6 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 21.63 in contrast to the S&P 500's average ratio of 2.95
Insulet is a Health Care company, and the sector average P/E and P/B ratios are 24.45 and 4.16 respectively