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Tandem Rides on Strong t:slim X2 Rollout Amid Stiff Rivalry

Zacks Equity Research

On Oct 14, 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 its recurring operating losses pose concerns for the stock. Tandem Diabetes currently carries a Zacks Rank #2 (Buy).

Shares of the company have outperformed the industry in the past year. The stock has surged 55.8% versus the industry's 0.1% decline. Notably, the company fared well on the top-line front with better-than-expected results in second-quarter 2019.

Strength in domestic sales along with a solid rollout of the t:slim X2 insulin pump in the international markets bodes well for the company. The raised sales guidance for 2019 also raises optimism. Moreover, favorable demographics in the diabetes market are expected to boost demand for Tandem Diabetes' products.

Tandem Diabetes Care, Inc. Price

Tandem Diabetes Care, Inc. Price

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

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 besides Dexcom’s G6 sensor.

Tandem Diabetes is also working on a mobile application, currently designed to use the Bluetooth radio capability to wirelessly upload pump data to t:connect, receive notification of pump alerts and alarms as well as club other health-related information from third-party sources.

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 Stryker SYK, Medtronic MDT and Varian VAR. While Varian sports a Zacks Rank #1 (Strong Buy), each of the other two carries the same solid Zacks Rank as Tandem Diabetes.You can see the complete list of today’s Zacks #1 Rank stocks here.

Stryker’s long-term earnings growth rate is expected to be 10.04%.

Medtronic’s long-term earnings growth rate is projected at 7.32%.

Varian’s long-term earnings growth rate is estimated to be 8%.

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