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Strong Pipeline Aids Tandem Diabetes Despite Stiff Rivalry

Zacks Equity Research

On Dec 24, 2019, we issued an updated research report on Tandem Diabetes Care, Inc. TNDM. The company's expansion initiatives in the global markets are a major positive. However, its heavy dependence on the sales of insulin pumps and recurring operating losses raise concerns for the stock. Tandem Diabetes currently carries a Zacks Rank #2 (Buy).

Shares of the company have outperformed its industry in the past year. The stock has soared 89.1% compared with the industry’s 29.6% rally. Notably, Tandem Diabetes fared well on the top-line front with better-than-expected results in third-quarter 2019.

Strength in the t:slim X2 Insulin pump’s domestic sales and the company’s growth in international markets are encouraging. We are impressed by a solid surge in global pump shipments during the quarter.

Tandem Diabetes Care, Inc. Price

Tandem Diabetes Care, Inc. Price

Tandem Diabetes Care, Inc. price | Tandem Diabetes Care, Inc. Quote

A robust product pipeline also drove the share price. Currently, products under development include AID systems, a next-generation hardware platform, and connected (mobile) health offerings. The company is on track to launch its second-generation AID system, t:slim X2 with Control IQ, in the fourth quarter of 2019. Per Tandem Diabetes, this AID system is expected to integrate the t:slim X2 pump with the treat-to-range technology that the company licensed from TypeZero Technologies LLC and Dexcom’s G6 sensor.

The company also plans to unveil t:sport Insulin Delivery System, its next-generation hardware platform, in 2020 or 2021. The hardware design for this pump has already been finalized. The player’s active software development is currently in process. Management plans to submit the pump for 510(k) clearance as an ultimate controller enabled pump in the summer of 2020.

Tandem Diabetes’ first t:sport cartridge line is presently in manufacturing stage. The company will also make an attempt to receive ACE pump classification for the t:sport in the second half of next year and plans to submit for a CE Mark in 2020 as well.

On the flip side, excessive reliance on the sales of insulin pumps and persistent operating losses pose threats to the company. Moreover, the company's operations might be affected by a tough competitive environment.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Haemonetics Corporation HAE, NuVasive, Inc NUVA and ResMed Inc RMD.

Haemonetics currently has a Zacks Rank of 2 and a projected long-term earnings growth rate of 13.5%.

Nuvasive’s long-term earnings growth rate is estimated at 17.8%. The company is currently Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ResMed’s long-term earnings growth rate is anticipated at 14%. It is currently a #2 Ranked player.

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Tandem Diabetes Care, Inc. (TNDM) : Free Stock Analysis Report
Haemonetics Corporation (HAE) : Free Stock Analysis Report
ResMed Inc. (RMD) : Free Stock Analysis Report
NuVasive, Inc. (NUVA) : Free Stock Analysis Report
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