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Here's Why You Should Add Tandem Diabetes to Your Portfolio

Zacks Equity Research

Tandem Diabetes Care, Inc. TNDM has been gaining from robust domestic and international growth. The company’s product pipeline is expected to further aid growth. However, the coronavirus-led economic doldrums and heavy dependence on its insulin pumps are likely to pose a threat.

Notably, the company is set to release first-quarter 2020 results on Apr 30.

Over the past year, the Zacks Rank #2 (Buy) stock has gained 28.2% compared with a 5.3% rise of the industry and 1.7% decline of the S&P 500.

Per our Style Score, Tandem Diabetes has a 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.

 


 

The renowned designer, developer and distributor of insulin pumps has a market capitalization of $4.37 billion. The company projects break-even growth for the first quarter of 2020 and expects to maintain its strong product performance. Further, it has a positive earnings surprise of 78.7%, on average, for the trailing four quarters.

Let’s delve deeper into the factors that are working in favor of the company.

Regulatory Approvals: We are upbeat about Tandem Diabetes’ FDA approval for its Basal-IQ technology, received on Mar 2, to be used as an interoperable automated glycemic controller (iAGC). Last December, the company received the iAGC designation for its t:slim X2 insulin pump with Control-IQ technology, following the FDA approval.

Product Pipeline: We are optimistic about the company’s product pipeline, which includes AID systems, a next-generation hardware platform, as well as connected (mobile) health offerings. Currently, all these are under development. The company is on track to launch its second-generation AID system — t:slim X2 — with Control IQ internationally in the latter half of 2020.

Q4 Results: We are optimistic about the company’s better-than-expected results in the fourth quarter of 2019. Strength in the t:slim X2 Insulin pump’s domestic sales and the company’s expansion in international markets as well as a robust product pipeline drove the top line significantly during this period. We are impressed with the surge in global pump shipments.

Despite the upsides, the company’s stock may witness a downturn with the coronavirus pandemic leading to an economic crisis. Also, major part of Tandem Diabetes’ revenues is generated through the sale of insulin pumps. Thus, the launch of substitutes for insulin pumps might pose a threat.

Estimate Picture

The Zacks Consensus Estimate for Tandem Diabetes’ first-quarter 2020 revenues is pegged at $85.4 million, suggesting a 29.4% rise from the year-ago reported number.

Other Key Picks

A few other top-ranked stocks from the broader medical space are ResMed Inc. RMD, National Vision Holdings, Inc. EYE and Phibro Animal Health Corporation PAHC.

ResMed has a projected long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

National Vision’s long-term earnings growth rate is estimated at 10.7%. The company presently has a Zacks Rank #2.

Phibro’s long-term earnings growth rate is estimated at 2.1%. It currently carries a Zacks Rank #2.

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ResMed Inc. (RMD) : Free Stock Analysis Report
 
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