One of the standouts of today's morning trading session was Insulet, which logged a 2.1% performance and outperformed the S&P 500 by 2.0%. The Medical Instruments & Supplies stock is now trading at $198.7 per share and may still have upside potential because it is still -14.42% under its average target price of $232.17. Analysts have set target prices ranging from $163.0 to $270.0 dollars per share, and have given the stock an average rating of buy.
We can use Insulet's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since PODD's short interest is 5.8%, the market sentiment is mixed on this stock.
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, 101.6% 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 on Insulet because its an analyst consensus of some upside potential, a buy rating, an average amount of shares sold short, and a significant number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are PODD's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2023 | 151,200 | 110,700 | 40,500 | 1138.46 |
| 2022 | 119,000 | 122,900 | -3,900 | 97.83 |
| 2021 | -68,100 | 111,900 | -180,000 | -300.0 |
| 2020 | 84,000 | 129,000 | -45,000 | 31.09 |
| 2019 | 98,400 | 163,700 | -65,300 | 46.26 |
| 2018 | 35,900 | 157,400 | -121,500 |
