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Here's Why You Should Invest In Tandem Diabetes (TNDM) Now
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Tandem Diabetes Care, Inc. (TNDM - Free Report) is well poised for growth in the coming quarters, backed by product launches and solid international performance. The company exited the second quarter of 2021 with better-than-expected revenues. International expansion of the Control-IQ technology, with its latest launch in Canada, buoys optimism. A strong solvency position is another upside. However, rising operating expenses and stiff condition raise concerns.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 3.8%, underperforming the 15% growth of the industry and the 30.3% rise of the S&P 500 composite.
The renowned a medical device company has a market capitalization of $7.12 billion.
Tandem Diabetes’ projected earnings per share growth for 2021 stands at a solid 151.79% compared with the industry’s projection of 16.7% and the S&P 500’s projected 55.37% rise.
Per our Style Score, Tandem Diabetes has Growth Score of A, which is reflective of the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Image Source: Zacks Investment Research
Let’s delve deeper.
Q2 Upsides: Tandem Diabetes delivered better-than-expected revenues for the second quarter of 2021. The year-over-year growth in revenues was driven by new customer demand and increasing renewal purchases from the company’s installed base. Strong domestic and international pump sales along with robust domestic and international pump shipments are impressive. Continued adoption of the company’s t:slim X2 insulin pumps by both new and existing users look encouraging as well. A 392-basis point expansion of gross margin instills optimism. The raised 2021 sales guidance bodes well for the stock.
Impressive Product Pipeline Innovation Continues: Tandem Diabetes’ constant efforts toward innovation and product development that cater to consumers’ and clinical needs raise optimism. During the second-quarter earnings call, the company noted the availability of the t:slim X2 technology in more than 20 countries worldwide. The company launched Control-IQ in Canada in the reported quarter and its distribution partners are preparing to launch Control-IQ in Germany and France. At present, the company’s products under development include Automated Insulin Delivery (AID) systems, a next-generation hardware platform as well as connected (mobile) health offerings. Tandem Diabetes further anticipates that performance in 2022 will benefit from new sensor offerings by both the CGM partners --DexCom and Abbott.
Focus on International Markets: We are upbeat about Tandem Diabetes’ strong international performance during the second quarter of 2021. The company witnessed high international demand for the t:slim X2 pump. The pump’s shipments to international markets exceeded the company’s expectations, reaching 13,200 in the quarter. This reaches the total to more than 60,000 customers for the international installed base. Year to date, the company registered sales of $82 million till the end of the second quarter, more than double of the prior-year count.
Strong Solvency: Tandem Diabetes exited the second quarter of 2021 with cash and cash equivalents, and short-term investments of $545 million compared with $513.4 million at the end of the first quarter. Meanwhile, the company registered total debt of $281 million for the second quarter. This figure is lower than the quarter-end cash and cash equivalent, and short-term investments level, indicating strong solvency. Further, the company does not have any debt payable in the near term.
Downsides
Escalating Operating Expenses: Rising operating expenses are putting pressure on Tandem Diabetes’ bottom line. During the second quarter, selling, general and administrative (SG&A) expenses rose 3%. Research and development (R&D) expenses also rose 22.7% on the company’s continued focus to drive long-term sales and profitability.
Tough Competitive Pressure: Tandem Diabetes faces significant competition from MedTech bigwigs like Medtronic plc (MDT - Free Report) . Notably, Medtronic’s MiniMed boasts a major part of the conventional insulin pump market share in the United States. Also, Tandem Diabetes’ ability to switch to strategies like price increases is limited by the competitive and regulatory conditions in the markets in which the company operates in.
Estimate Trend
Tandem Diabetes has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved up from 6 cents to 29 cents.
The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $172.8 million, suggesting a 39.81% surge from the year-ago reported number.
Key Picks
A few better-ranked stocks from the Medical-Instruments industry include Intuitive Surgical, Inc. (ISRG - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .
Image: Bigstock
Here's Why You Should Invest In Tandem Diabetes (TNDM) Now
Tandem Diabetes Care, Inc. (TNDM - Free Report) is well poised for growth in the coming quarters, backed by product launches and solid international performance. The company exited the second quarter of 2021 with better-than-expected revenues. International expansion of the Control-IQ technology, with its latest launch in Canada, buoys optimism. A strong solvency position is another upside. However, rising operating expenses and stiff condition raise concerns.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 3.8%, underperforming the 15% growth of the industry and the 30.3% rise of the S&P 500 composite.
The renowned a medical device company has a market capitalization of $7.12 billion.
Tandem Diabetes’ projected earnings per share growth for 2021 stands at a solid 151.79% compared with the industry’s projection of 16.7% and the S&P 500’s projected 55.37% rise.
Per our Style Score, Tandem Diabetes has Growth Score of A, which is reflective of the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Image Source: Zacks Investment Research
Let’s delve deeper.
Q2 Upsides: Tandem Diabetes delivered better-than-expected revenues for the second quarter of 2021. The year-over-year growth in revenues was driven by new customer demand and increasing renewal purchases from the company’s installed base. Strong domestic and international pump sales along with robust domestic and international pump shipments are impressive. Continued adoption of the company’s t:slim X2 insulin pumps by both new and existing users look encouraging as well. A 392-basis point expansion of gross margin instills optimism. The raised 2021 sales guidance bodes well for the stock.
Impressive Product Pipeline Innovation Continues: Tandem Diabetes’ constant efforts toward innovation and product development that cater to consumers’ and clinical needs raise optimism. During the second-quarter earnings call, the company noted the availability of the t:slim X2 technology in more than 20 countries worldwide. The company launched Control-IQ in Canada in the reported quarter and its distribution partners are preparing to launch Control-IQ in Germany and France. At present, the company’s products under development include Automated Insulin Delivery (AID) systems, a next-generation hardware platform as well as connected (mobile) health offerings. Tandem Diabetes further anticipates that performance in 2022 will benefit from new sensor offerings by both the CGM partners --DexCom and Abbott.
Focus on International Markets: We are upbeat about Tandem Diabetes’ strong international performance during the second quarter of 2021. The company witnessed high international demand for the t:slim X2 pump. The pump’s shipments to international markets exceeded the company’s expectations, reaching 13,200 in the quarter. This reaches the total to more than 60,000 customers for the international installed base. Year to date, the company registered sales of $82 million till the end of the second quarter, more than double of the prior-year count.
Strong Solvency: Tandem Diabetes exited the second quarter of 2021 with cash and cash equivalents, and short-term investments of $545 million compared with $513.4 million at the end of the first quarter. Meanwhile, the company registered total debt of $281 million for the second quarter. This figure is lower than the quarter-end cash and cash equivalent, and short-term investments level, indicating strong solvency. Further, the company does not have any debt payable in the near term.
Downsides
Escalating Operating Expenses: Rising operating expenses are putting pressure on Tandem Diabetes’ bottom line. During the second quarter, selling, general and administrative (SG&A) expenses rose 3%. Research and development (R&D) expenses also rose 22.7% on the company’s continued focus to drive long-term sales and profitability.
Tough Competitive Pressure: Tandem Diabetes faces significant competition from MedTech bigwigs like Medtronic plc (MDT - Free Report) . Notably, Medtronic’s MiniMed boasts a major part of the conventional insulin pump market share in the United States. Also, Tandem Diabetes’ ability to switch to strategies like price increases is limited by the competitive and regulatory conditions in the markets in which the company operates in.
Estimate Trend
Tandem Diabetes has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved up from 6 cents to 29 cents.
The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $172.8 million, suggesting a 39.81% surge from the year-ago reported number.
Key Picks
A few better-ranked stocks from the Medical-Instruments industry include Intuitive Surgical, Inc. (ISRG - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .
Intuitive Surgical, which carries a Zacks Rank #1, has a long-term earnings growth rate of 9.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX, sporting a Zacks Rank #2, has a long-term earnings growth rate of 19.9%.