SENS stock: 3 advantages and 3 disadvantages to take into account
Although manageable with modern medical technology, diabetes is a pain in the back nonetheless. Frequently, patients have to prick their fingertips to check their blood sugar levels. However, the advent of continuous glucose monitoring (CGM) systems, such as the Eversense device created by Senseonics (NYSEAMERICAN:MEANING), provides much-needed convenience for patients. It’s no wonder that social media has turned to SENS actions.
To give a quick overview, Senseonics’ Eversense systems are available in two life models: a 90 day version and a 180 day version. The Food and Drug Administration approved the first in June 2018, which is a CGM inserted under the skin. From there, patients can monitor their critical health indicators through a smartphone app.
Among the memes actions, the SENS action is one of the most sensible. And while I know there is a lot of debate raging about what is a Memes Business, I am referring to Morningstar indications on the subject, which indicate that they are equity units “which see dramatic price increases, mainly powered [sic] by people on social media.
Based on this explanation, the SENS action seems to qualify. Of course, I realize that is not a satisfactory definition and criticism will continue to pour in. But for this article, I want to focus on whether or not this is an attractive opportunity at current levels.
The SENS action is potentially linked to a new paradigm of care
What initially distances some people from SENS stocks is that stocks were trading well below a dollar until the start of this year. But the reason for the recovery is that Senseonics can change the paradigm of diabetes care and management.
- Point obstacle: As I mentioned above, the FDA has already approved the 90-day Eversense system. And the regulator was to review the 180-day version. However, the Covid-19 crisis has occurred, disrupting everything. Not only that, the FDA has warned that it suffers from large administrative backlogs, which initially hampered the SENS action. But the hope is that once this unique, (hopefully) one-time challenge is resolved, SENS will take off.
- Medical Benefits: It is also mentioned above that diabetes imposes daily challenges on patients. But with CGM systems, people with the condition can enjoy many more freedoms, which significantly improve mental health while protecting physical health. In addition, Eversense has unique advantages, such as vibration alerts on the body in case of critical situations. This is a first for a CGM system.
- Press them briefly: Despite people’s anger over the definition of memes actions, you can’t help but notice that SENS actions exhibit the distinctive characteristics of the label, especially the intention of short squeeze. As of June 15, the percentage of short float is close to 20%, which is very high. This dynamic sets up the real possibility of a short squeeze, which would be profitable for the bulls.
Senseonics is not without risks
Certainly, the SENS share is an attractive proposition because it combines two compelling factors: a fundamentally strong and relevant company and an extremely bullish fury. But there is also something to be said about putting too much money in an obvious trade. Plus, here are three other drawbacks to consider.
- Still necessary finger pricks: This headwind took me by surprise and is something promoters should consider before buying SENS shares. According to Diatribe.org, although Eversense is very precise, it requires “Two finger calibrations per day. “ To me, this seems to take a key benefit from the CGM path under the skin.
- Competition: On a similar note, competition has the potential to steal market share from Senseonics. This isn’t a complete replacement for Eversense, but rather marketing attributes that Eversense lacks. For example, FreeStyle Libre, a CGM system of Abbott Laboratories (NYSE:ABT), does not require finger calibrations. In addition, FreeStyle is approved for dosing insulin (except in certain cases), a distinct advantage over Eversense.
- Excessive compression problem: While the short float percentage is close to 20%, the the short ratio is only 1.63. This means that short traders can hedge their positions in less than two days depending on the average trading volume. Keep in mind that I’m no expert on short squeeze tactics, but it looks like you should have the short ratio in your favor if you want to trap bears. This is not quite the case for the SENS action.
Negotiate at your discretion
Apparently, what irritates people more than mislabeling a stock of memes is providing no-opinion analysis one way or the other. With such popularity for SENS actions, I agree to leave this article as is. But, you have to give the audience what they want, so there you go.
Maybe no one will be surprised, I will sit on the sidelines. Personally, I think there is too much speculation in SENS’s stock. Additionally, the underlying company’s Eversense product doesn’t have a knockout blow. Instead, it offers some benefits, such as body vibration alerts, while also having some drawbacks, such as daily finger calibrations.
Ultimately, it’s your money and your decision. Exercise due diligence and negotiate carefully.
As of the date of publication, Josh Enomoto did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
Former senior business analyst for Sony Electronics, Josh Enomoto has helped negotiate major contracts with Fortune Global 500 companies. Over the past few years, he has provided unique and essential information for the investment markets, as well as for various other sectors, including law, construction management and health.