Tandem (TNDM) Global Growth Strong, Costs Continue to Rise
On May 13, 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. Tandem Diabetes currently carries a Zacks Rank #3 (Hold).
Tandem Diabetes delivered better-than-expected results for the first quarter of 2021. The robust top-line growth amid post-pandemic business recovery is impressive. Strong domestic and international pump sales along with robust domestic and international pump shipments buoy optimism. Continued strength in demand for t:slim X2 insulin pumps across the globe and rising customer adoption of the company’s Control-IQ technology look encouraging. A robust product pipeline is also impressive. Expansion of both margins and a raised 2021 sales forecast bode well for the stock.
On last quarter’s earnings call, the company noted that it is planning to launch Control-IQ in Canada during the first quarter and also in Germany and France in late 2021. Further, the company stated that it is working toward Type 2 indication for Control-IQ as well.
Tandem Diabetes Care, Inc. Price
Tandem Diabetes Care, Inc. price | Tandem Diabetes Care, Inc. Quote
In terms of international growth, in the first quarter of 2021, Tandem Diabetes witnessed high international demand for the t:slim X2 pump. The pump’s shipments to international market exceeded the company’s expectations, reaching 8,700 for the quarter.
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, the company incurred operating loss in the reported quarter on rising expenses. In the reported quarter, selling, general and administrative expenses rose 17.8%. Research and development expenses rose 22.7% on continued focus of the company to drive its long-term sales and profitability initiative.
Tandem Diabetes has been underperforming the industry for the past year. The stock fell 3.8% against the industry’s 19.2% rise.
Key Picks
A few better-ranked stocks from the broader medical space are National Vision Holdings, Inc. EYE, Owens & Minor, Inc. OMI and Envista Holdings Corporation NVST. While National Vision and Owens & Minor sports a Zacks Rank #1 (Strong Buy), Envista Holdings carries a Zacks Rank 2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.
National Vision has a projected long-term earnings growth rate of 12%.
Owens & Minor has a projected long-term earnings growth rate of 15%.
Envista Holdings has an estimated long-term earnings growth rate of 26%.
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