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Tandem Diabetes Care, Inc. (TNDM) Down 13.2% Since Last Earnings Report: Can It Rebound?

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Zacks Equity Research
·4 min read
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It has been about a month since the last earnings report for Tandem Diabetes Care, Inc. (TNDM). Shares have lost about 13.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Tandem Diabetes Care, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Tandem Diabetes Q4 Earnings Beat, Gross Margin Falls

Tandem Diabetes adjusted earnings per share of 24 cents for fourth-quarter 2020 registered a stupendous 500% surge from the year-ago reported earnings per share of 4 cents. Further, the quarter's adjusted EPS exceeded the Zacks Consensus Estimate by 84.6%.

GAAP earnings per share came in at 22 cents per share, up by 450% from the year-ago figure.

Full-year GAAP loss per share was 56 cents, wider than the year-ago loss of 42 cents per share.

Revenues

Revenues in the quarter came in at $168.1 million, beating the Zacks Consensus Estimate by 19.1%. The top line surged 55% year over year despite sales pressure due to COVID-19. Robust adoption of the company’s Control-IQ technology significantly boosted the top line in the reported quarter.

Full-year revenues were $498.8 million, reflecting a 37.7% uptick from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 5.7%.

Q4 in Detail

Tandem Diabetes registered international sales of $28.7 million in the quarter under review, recording a 182% uptick from fourth-quarter 2019. Domestic sales came in at $139.3 million, up 42% year on year.

International pump shipments surged 278% to 8,133 pumps. Domestic pump shipments jumped 41% year over year to 24,552 units.

The company believes that surge in pump shipments resulted from the continued momentum of its Control-IQ technology.

Margins

Gross profit in the December-end quarter was $90.6 million, marking a 50.2% year-over-year growth. Gross margin was, however, 53.9%, indicating a contraction of 172 basis points (bps).

Selling, general and administrative expenses rose 19.7% to $54.5 million in the quarter under review. Research and development expenses also rose 38.3% to $17.4 million.

Overall operating profit was $18.7 million, up 770.4% year over year. Operating margin expanded 913 bps year over year to 11.1%.

Financial Position

Tandem Diabetes exited 2020 with cash and cash equivalents, and short-term investments of $484.9 million compared with $176.5 million recorded at the end of 2019.

2021 Guidance

Based on the strength in demand for t:slim X2 insulin pump across the globe, Tandem Diabetes has issued its financial guidance for the year 2021.

For the year, sales are estimated to be in the range of $600-$615 million, representing annual sales growth of 20-23% compared with 2020. The Zacks Consensus Estimate for 2021 revenues is pegged at $564.3 million.

The full-year sales outlook includes international sales of $105-$110 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 25.64% due to these changes.

VGM Scores

At this time, Tandem Diabetes Care, Inc. has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tandem Diabetes Care, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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