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Here's Why You Should Hold on to 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 its impressive lineup of new products. The flourishing diabetes market provides a favorable opportunity for the company’s growth. Strong solvency appears highly encouraging. However, concerns loom over Tandem Diabetes’ substantial reliance on insulin pumps and the impact of macroeconomic challenges.
In the past year, this Zacks Rank #3 (Hold) stock has surged 110.9% compared with the 6.1% growth of the industry and a 23.5% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $3.36 billion. Tandem Diabetes projects an estimated earnings growth rate of 35.2% for 2025 compared with the 9.3% of the S&P 500. In the trailing four quarters, TNDM delivered an average earnings surprise of 9.9%.
Let’s delve deeper.
Tailwinds
Impressive Product Innovation Continues: Tandem Diabetes’ cutting-edge innovations are creating new possibilities for diabetes management. In 2023, the company initiated a scaled global launch of the Tandem Source data management application, which provides a central location and comprehensive reporting to view critical patient data. The t:slim X2 pump, paired with Dexcom’s G7 sensor, rolled out internationally in January 2024 after its launch in the United States late last year.
It is the first AID system to integrate with Abbott’s new FreeStyle Libre 2 Plus sensor, offering pump users in the United States to benefit from a hybrid closed-loop system. Tandem Mobi, nearly half the size of the t:slim X2 pump, was commercially launched in the United States in February this year. Furthermore, Mobi secured 510(k) clearance for an expanded pediatric indication for use in individuals two years of age and older, and TNDM will soon deploy the updated Control-IQ software on both t:slim and Mobi later in 2024.
Image Source: Zacks Investment Research
Booming Diabetes Market Bodes Well: Tandem Diabetes is poised to capitalize on the global diabetes care device market, which is expected to reach $17.87 billion by 2032 from the 2022 valuation of $9.7 billion. In the near and longer term, the company aims to strategically expand the adoption of the insulin pump by people with type 1 diabetes across all its markets and produce evolved products and services to attract type 2 diabetes people who use insulin-intensive therapy.
The launch of t:slim X2 with the new CGM integration has been well-received by the diabetes community for having a choice in their therapy management. From a clinical perspective, the company is making great strides in expanding Control-IQ's indication to people living with type 2 diabetes. The Tandem Diabetes team is vigorously developing its product, launch and commercial strategy to be very active in the type 2 space.
Strong Solvency but Highly Leveraged: Tandem Diabetes exited the first quarter of 2024 with cash and cash equivalents and short-term investments of $467.8 million, while short-term payable debt remained nil. The long-term debt rose to $348 million from $285 million at the end of the fourth quarter of 2023 but remained below the cash balance.
Headwinds
Heavy Dependence on Insulin Pumps: Tandem Diabetes heavily relies on the sales of insulin pumps, accounting for 45% of worldwide sales in the first quarter of 2024. Various factors, such as challenges in gaining widespread acceptance in the diabetes treatment community and lack of evidence supporting the safety, effectiveness and ease of use of its products compared to competitors, can potentially hamper the company’s business, financial condition and operating results as well.
Macroeconomic Headwinds Persist: The uncertainties related to the current global economic and political conditions could be challenging for Tandem Diabetes to accurately predict the demand for its products. Unfavorable economic conditions could increase the company’s expenses, including unpredictable variability in commodity prices, wage increases and inflation. In the first quarter, the cost of sales increased 12.2% from the comparable 2023 period.
Estimate Trend
The Zacks Consensus Estimate for Tandem Diabetes’ 2024 loss has moved up from $1.69 to $1.70 per share in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $868.5 million. This suggests a 16.2% rise from the year-ago reported number.
Hims & Hers Health’s earnings are expected to surge 263.6% in 2024 compared with the industry’s 17%. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. Its shares have surged 132.6% against the industry’s 28.8% decline in the past year.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared with the industry’s 13.2%. Shares of MEDP have rallied 81.8% compared with the industry’s 3.6% growth over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
ResMed, carrying a Zacks Rank #2 (Buy) at present, has an estimated fiscal 2024 earnings growth rate of 19.6% compared with the industry’s 13.6%. Shares of RMD have dropped 4.9% against the industry’s 2.2% growth over the past year.
RMD’s earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 2.8%. In the last reported quarter, it delivered an earnings surprise of 10.9%.
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Here's Why You Should Hold on to Tandem Diabetes (TNDM) Now
Tandem Diabetes Care, Inc. (TNDM - Free Report) is well-poised for growth in the coming quarters, backed by its impressive lineup of new products. The flourishing diabetes market provides a favorable opportunity for the company’s growth. Strong solvency appears highly encouraging. However, concerns loom over Tandem Diabetes’ substantial reliance on insulin pumps and the impact of macroeconomic challenges.
In the past year, this Zacks Rank #3 (Hold) stock has surged 110.9% compared with the 6.1% growth of the industry and a 23.5% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $3.36 billion. Tandem Diabetes projects an estimated earnings growth rate of 35.2% for 2025 compared with the 9.3% of the S&P 500. In the trailing four quarters, TNDM delivered an average earnings surprise of 9.9%.
Let’s delve deeper.
Tailwinds
Impressive Product Innovation Continues: Tandem Diabetes’ cutting-edge innovations are creating new possibilities for diabetes management. In 2023, the company initiated a scaled global launch of the Tandem Source data management application, which provides a central location and comprehensive reporting to view critical patient data. The t:slim X2 pump, paired with Dexcom’s G7 sensor, rolled out internationally in January 2024 after its launch in the United States late last year.
It is the first AID system to integrate with Abbott’s new FreeStyle Libre 2 Plus sensor, offering pump users in the United States to benefit from a hybrid closed-loop system. Tandem Mobi, nearly half the size of the t:slim X2 pump, was commercially launched in the United States in February this year. Furthermore, Mobi secured 510(k) clearance for an expanded pediatric indication for use in individuals two years of age and older, and TNDM will soon deploy the updated Control-IQ software on both t:slim and Mobi later in 2024.
Image Source: Zacks Investment Research
Booming Diabetes Market Bodes Well: Tandem Diabetes is poised to capitalize on the global diabetes care device market, which is expected to reach $17.87 billion by 2032 from the 2022 valuation of $9.7 billion. In the near and longer term, the company aims to strategically expand the adoption of the insulin pump by people with type 1 diabetes across all its markets and produce evolved products and services to attract type 2 diabetes people who use insulin-intensive therapy.
The launch of t:slim X2 with the new CGM integration has been well-received by the diabetes community for having a choice in their therapy management. From a clinical perspective, the company is making great strides in expanding Control-IQ's indication to people living with type 2 diabetes. The Tandem Diabetes team is vigorously developing its product, launch and commercial strategy to be very active in the type 2 space.
Strong Solvency but Highly Leveraged: Tandem Diabetes exited the first quarter of 2024 with cash and cash equivalents and short-term investments of $467.8 million, while short-term payable debt remained nil. The long-term debt rose to $348 million from $285 million at the end of the fourth quarter of 2023 but remained below the cash balance.
Headwinds
Heavy Dependence on Insulin Pumps: Tandem Diabetes heavily relies on the sales of insulin pumps, accounting for 45% of worldwide sales in the first quarter of 2024. Various factors, such as challenges in gaining widespread acceptance in the diabetes treatment community and lack of evidence supporting the safety, effectiveness and ease of use of its products compared to competitors, can potentially hamper the company’s business, financial condition and operating results as well.
Macroeconomic Headwinds Persist: The uncertainties related to the current global economic and political conditions could be challenging for Tandem Diabetes to accurately predict the demand for its products. Unfavorable economic conditions could increase the company’s expenses, including unpredictable variability in commodity prices, wage increases and inflation. In the first quarter, the cost of sales increased 12.2% from the comparable 2023 period.
Estimate Trend
The Zacks Consensus Estimate for Tandem Diabetes’ 2024 loss has moved up from $1.69 to $1.70 per share in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $868.5 million. This suggests a 16.2% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hims & Hers Health (HIMS - Free Report) , Medpace (MEDP - Free Report) and ResMed (RMD - Free Report) .
Hims & Hers Health’s earnings are expected to surge 263.6% in 2024 compared with the industry’s 17%. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. Its shares have surged 132.6% against the industry’s 28.8% decline in the past year.
HIMS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared with the industry’s 13.2%. Shares of MEDP have rallied 81.8% compared with the industry’s 3.6% growth over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
ResMed, carrying a Zacks Rank #2 (Buy) at present, has an estimated fiscal 2024 earnings growth rate of 19.6% compared with the industry’s 13.6%. Shares of RMD have dropped 4.9% against the industry’s 2.2% growth over the past year.
RMD’s earnings surpassed estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 2.8%. In the last reported quarter, it delivered an earnings surprise of 10.9%.