Here's Why You Should Retain Tandem Diabetes (TNDM) Now
Tandem Diabetes Care, Inc. TNDM is well-poised for growth in the coming quarters, backed by the strength of t:slim X2 based on Control-IQ technology and new product launches. The ongoing progress in terms of new product launches is encouraging.
The company is preparing for the scaled launch of t:slim X2 with CGM integrations, beginning in the United States this fall. However, escalating operating costs and stiff rivalry are concerning.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 41.7% compared with the 1.2% fall of the industry and an 8.2% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $1.84 billion. Tandem Diabetes projects an estimated earnings growth rate of 22.8% for 2024 compared with 23.4% of the industry. In the last reported quarter, TNDM delivered an earnings surprise of 44.4%.
Let’s delve deeper.
Tailwinds
Impressive Product Innovation Continues: In the second quarter of 2023, the company made exceptional progress in terms of new product innovations, starting with the rollout of Tandem Source — the global data management application that was designed specifically with clinicians in mind. The highly differentiated t:slim X2’s integrations with Dexcom G7 and FreeStyle Libre 2 sensors are also on track for a scaled launch in the United States this fall.
Further, the company recently reached the milestone of FDA clearance for Tandem Mobi — the world's smallest durable automated insulin delivery system. These new products are expected to be significant in fulfilling TNDM’s vision of having a unique portfolio of devices that meet the diverse needs of diabetes people and reinforce leadership in automated insulin delivery.
Image Source: Zacks Investment Research
t:slim’s Strong Prospects Continue: Tandem Diabetes’ flagship product, t:slim X2 with Control-IQ technology, continues to make a positive clinical impact in terms of overall satisfaction and ease of use and reduces the burden of diabetes management. At the end of the second quarter of 2023, the installed base of the insulin pump represented 16% year-over-year growth, with more than 29,000 pump shipments worldwide.
In the near term, the company is all set to make t:slim X2 the first FDA-cleared insulin pump integrated with multiple CGM sensors. Dexcom G7 integration is expected to be available in the United States in the early fourth quarter, followed by the Freestyle Libre 2 integration in the middle of the fourth quarter.
A Solvent Balance Sheet: Tandem Diabetes exited the second quarter of 2023 with cash and cash equivalents and short-term investments of $507 million compared with $520 million recorded as of Dec 31, 2022. The long-term debt totaled $284 million at the end of the second quarter, much less than the corresponding cash balance. Added to this, TNDM did not have any short-term debt payable on its balance sheet. This indicates strong solvency.
Headwinds
Mounting Expenses: In the second quarter of 2023, Tandem Diabetes missed revenue estimates. SG&A and R&D expenses escalated 21.1% and 27.9%, respectively, compared to the prior-year quarter.
Tough Competitive Pressure: Tandem Diabetes operates in a highly competitive environment dominated by firms ranging from large multinational corporations with significant resources to startups. Also, competitive and regulatory conditions in the markets where Tandem Diabetes operates limit the company’s ability to switch to strategies like price increases.
TNDM primarily competes with Medtronic’s market-leading MiniMed, a division of Medtronic. MiniMed boasts a major portion of the conventional insulin pump market share in the United States.
Estimate Trend
Tandem Diabetes has been witnessing a negative estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 loss per share has moved up from $1.03 to $1.49 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $785.7 million. This suggests a 1.9% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics HAE, SiBone SIBN and Quanterix QTRX.
Haemonetics has an earnings yield of 4.29% against the industry’s -2%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 15% against the industry’s 1.3% decline in the past year.
HAE sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
SiBone, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.2%. Shares of the company have rallied 23.6% compared with the industry’s 0.5% growth over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 16.3%. Shares of QTRX have risen 159.5% against the industry’s 1.4% decline over the past year.
Quanterix’s earnings surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Haemonetics Corporation (HAE) : Free Stock Analysis Report
Tandem Diabetes Care, Inc. (TNDM) : Free Stock Analysis Report
Quanterix Corporation (QTRX) : Free Stock Analysis Report
SiBone (SIBN) : Free Stock Analysis Report
