Should You Reconsider Insulet After Recent FDA Clearance for Omnipod 5 in 2025?

Thinking about what to do with Insulet stock right now? You are certainly not alone. Whether you are a longtime holder enjoying remarkable gains or just now sizing up the opportunity, Insulet has made itself hard to ignore. Just look at the numbers: despite a mild pullback of -1.3% over the past week and -0.9% over the past month, the stock is up a staggering 37.1% over the past year and an impressive 27.6% since the start of this year alone. Even stretching back farther, annualized returns of more than 40% over three and five years highlight how appealing the story has been for growth-focused investors.

Much of this long-term momentum can be linked to optimism around the diabetes technology sector overall, alongside investor appetite for medtech names with proven track records of innovation and execution. As the broader market has shifted its focus toward the potential of healthcare technology, Insulet's flagship solutions have kept it front of mind for many analysts, helping the stock trade near its highs even with the occasional short-term dip.

But the real question for investors now is not just about the past. Is Insulet undervalued, fairly priced, or already overbought at current levels? On a pure numbers basis, the company’s latest valuation check gives it a value score of 0 out of 6, meaning it is not flagged as undervalued by any of the typical metrics we track. But numbers never tell the whole story. Let’s break down the major approaches to stock valuation and see where Insulet stacks up, and then look at a perspective on valuation that could matter even more.

Insulet scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Insulet Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's fair value by forecasting its future cash flows and discounting them back to today using a required rate of return. For Insulet, this means looking at how much cash the business is expected to generate in the coming years and what that is worth in present-day dollars.

Currently, Insulet generates $348.7 million in Free Cash Flow (FCF). Analyst estimates project steady growth, with FCF expected to reach $778 million by 2029. Estimates only extend five years into the future, so any projections beyond that are extrapolated using industry assumptions.

After piecing together analyst insights and long-term extrapolations, the DCF calculation arrives at a fair value for Insulet shares of $276.59. When compared to the company’s actual share price, this DCF suggests Insulet is trading at an 18.5% premium to its intrinsic value. In other words, it appears overvalued by this method.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Insulet.

Our Discounted Cash Flow (DCF) analysis suggests Insulet may be overvalued by 18.5%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Insulet Price vs Earnings

The Price-to-Earnings (PE) ratio is a commonly used valuation metric for profitable companies like Insulet because it reflects what investors are willing to pay today for each dollar of the company’s current earnings. It is a fast way to judge if the market has high hopes for ongoing profitability and future growth.

The level at which a PE ratio is considered “fair” depends not just on the company’s absolute profitability, but on its expected earnings growth and the risks associated with that growth. Companies growing quickly and operating with less risk can justify higher PE ratios, while mature or riskier businesses tend to command lower multiples.

Insulet’s current PE ratio stands at a lofty 97.7x, which is much higher than both the industry average of 28.4x and the peer average of 34.4x. This suggests that the market has especially high expectations for Insulet’s future earnings growth compared to similar companies.

To better understand whether this high multiple is justified, we turn to Simply Wall St’s “Fair Ratio.” This metric adjusts for factors like Insulet’s earnings growth, profit margins, industry environment, and company size, giving a tailored benchmark. It is a more nuanced way to gauge value than a blanket comparison to industry or peer groups alone. For Insulet, the Fair Ratio is estimated at 36.0x, which is significantly lower than the current PE.

Because Insulet’s current PE of 97.7x is well above its Fair Ratio of 36.0x, the stock appears overvalued on earnings multiples alone.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Insulet Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your personal story or perspective about a company, where you combine your assumptions about future revenue, earnings, and margins with a fair value estimate to explain why you think the business is a buy, hold, or sell.

Narratives link Insulet’s story, such as its international growth plans, new product launches, or potential risks, to a clear financial forecast and a calculated fair value. This approach makes your investment rationale more concrete and actionable, offering more insight than just following numbers alone.

You do not need to be a professional analyst; Narratives are easy to create and update right on Simply Wall St’s Community page, an accessible platform used by millions of investors. Narratives help you decide when to buy or sell by directly comparing your Fair Value to the current Price, with dynamic updates whenever significant news or earnings are released.

For example, one investor may build their Insulet Narrative based on the most optimistic analyst forecast, believing in continued rapid global adoption and targeting a fair value near $400 per share. Another might emphasize risks from heavy reliance on a single product and adopt a more cautious stance near $300 per share.

Do you think there's more to the story for Insulet? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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