During today's morning trading session, Insulet took the market by storm, rocketing to $264.88 per share despite it now being above its mean target price of $250.13. This 8.1% movement implies there may not be much more room for upwards movement for the stock -- if its analysts are to be believed. They are giving the Medical Instruments & Supplies stock on average rating of buy, with target prices ranging from 185.0 to 300.0 dollars per share.
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 5.3%, the market sentiment is mixed on this stock.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy 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, 102.1% 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 little 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 | 145,700 | 75,600 | 70,100 | 1897.44 |
| 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 |
