As a recent spinoff in late 2021, Embecta has been hit with negative sentiments due to the emergence GLP-1 drugs and their impact on insulin demand as well as a higher than normal mortality rate from diabetics hospitalised with COVID.
Over the past 6 years and a 43% CAGR for GLP-1 drugs, the demand trends for insulin are only slightly negative and likely more related to the COVID impact. Despite this, the market has priced the company at roughly 8x 2024 earnings despite growth tailwinds in emerging markets and Ozempic affordability questions for most of the 500 million diabetics worldwide.
In short, the asset appears mispriced considering the durability of their revenue and the growth tailwinds on the back of very attractive rates of return. Today’s breakdown will focus more on the expectations versus the reality for this leader in the manufacturing of sharps, syringes and pens for diabetics.
Contents:
Business Overview
Operations
Headwinds
Financial Health
Valuations
Listen to this episode with a 7-day free trial
Subscribe to The Bottom-Up Bulletin to listen to this post and get 7 days of free access to the full post archives.
