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Tandem Diabetes (TNDM) Rides on Innovation Despite Cost Woes

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·3 min read
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Tandem Diabetes Care, Inc.'s TNDM expansion initiatives in the global markets are a major positive. Moreover, the company boasts an impressive product line. Tandem Diabetes currently carries a Zacks Rank #2 (Buy).

Tandem Diabetes has been outperforming the industry for the past three months. The stock has gained 32.4% compared with the industry’s 11.4% rise.

The company delivered better-than-expected revenues for the second quarter of 2021. The solid performance in the quarter was driven by both new customer demand and increasing renewal purchases from the company’s installed base. Strong domestic and international pump sales along with robust domestic and international pump shipments are impressive.

Continued adoption of the company’s t:slim X2 insulin pumps by both new and existing users is encouraging as well. International expansion of the Control-IQ technology, with its latest launch in Canada, buoys optimism. The expansion of gross margin and a raised 2021 sales forecast bode well for the stock.

Tandem Diabetes Care, Inc. Price

Tandem Diabetes Care, Inc. Price
Tandem Diabetes Care, Inc. Price

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

Tandem Diabetes constantly undertakes innovation and develops products to cater to consumer and clinical needs. Currently, products under development include AID systems, a next-generation hardware platform, as well as connected (mobile) health offerings.

During the second-quarter earnings call, the company stated that t:slim X2 technology is now available in more than 20 countries worldwide. It has launched Control-IQ in the majority of these geographies and received strong customer feedback. Canada, Germany, and France make up more than half of the company’s total international opportunity in terms of the number of people living with Type-1 diabetes.

Tandem Diabetes launched Control-IQ in Canada in the second quarter of 2021 and its distribution partners are preparing to launch Control-IQ in Germany and France. In terms of product launch, the company made good progress in the first half of 2021 and is well-positioned both domestically and internationally for the remainder of 2021 and beyond.

Tandem Diabetes further anticipates that 2022 will benefit from new sensor offerings by both CGM partners, DexCom and Abbott. It is particularly hopeful about DexCom’s G4, the fourth generation sensor. Based on the FDA's interoperability initiative and the timing of DexCom's clearance, Tandem plans the commercial launch of its Control-IQ technology with the G7 sensor within one quarter following the receipt of FDA clearance.

The company also plans to collaboratively bring the integrated product with Abbott Libre's technology to the diabetes community in 2022. It intends to begin the U.S. commercial launch, which depends on the timing of Abbott's FDA clearance.

However, heavy dependence on insulin pumps and stiff competition is a concern. Further, the continued impact of the pandemic on the company’s international operations poses a threat.

Also, escalating costs and expenses are putting pressure on the bottom line. In the second quarter, selling, general and administrative expenses rose 3%. Research and development expenses also rose 22.7% on continued focus of the company to drive its long-term sales and profitability initiative.

Other Key Picks

A few other top-ranked stocks from the broader medical space are Envista Holdings Corporation NVST, BellRing Brands, Inc. BRBR,and Henry Schein, Inc. HSIC, each carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Envista Holdings has an estimated long-term earnings growth rate of 27%.

BellRing Brands has an estimated long-term earnings growth rate of 29%.

Henry Schein has a projected long-term earnings growth rate of 14%.

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Tandem Diabetes Care, Inc. (TNDM) : Free Stock Analysis Report

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BellRing Brands, Inc. (BRBR) : Free Stock Analysis Report

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