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Here's Why You Should Hold on to Tandem Diabetes (TNDM) Stock
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Tandem Diabetes Care, Inc. (TNDM - Free Report) has been gaining on robust domestic and international pump sales and shipments. Its better-than-expected revenues in the fourth quarter of 2020 buoy optimism. However, continued impact of the pandemic on the company’s international markets and heavy dependence on insulin pumps are concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 63.2% compared with 50.4% growth of the industry and 62.8% rise of the S&P 500 composite.
The renowned designer, developer and distributor of insulin pumps has a market capitalization of $5.64 billion. The company expects to maintain strong product performance. The company surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average surprise being 17.68%.
Let’s delve deeper.
Product Pipeline: Tandem Diabetes’ robust product pipeline lifts our sentiment. During fourth-quarter 2020, the company obtained Canadian approval for its t:slim X2 insulin pump with Control-IQ technology. Earlier to that, it launched its first-generation mobile app domestically. The company intends to launch Tandem Source in select countries outside the United States later in 2021 with a domestic launch to follow. Further, the company is currently on track to launch its app-based mobile bolus feature for the t:slim X2 in the first half of 2021.
Tandem Diabetes, based on the FDA's interoperability initiative and the timing of DexCom's clearance, is planning the commercial launch of its Control-IQ technology with the G7 sensor within a quarter following the receipt of the FDA clearance.
Strategic Deals: Tandem Diabetes’ partnership deals buoy optimism. In July 2020, the company had entered into a non-exclusive patent cross-license agreement with Medtronic plc (MDT - Free Report) for certain technologies in the field of diabetes. Further, Tandem Diabetes’ partnership with Abbott Laboratories (ABT - Free Report) (proposed in October 2019) is also progressing well. This tie-up will enable the companies to integrate Abbott's FreeStyle Libre continuous glucose-monitoring technology with Tandem Diabetes’ insulin-delivery systems for enhanced diabetes management.
Another notable partnership of Tandem Diabetes, with DexCom, is also progressing quite well.
Strong Q4 Results: We are upbeat about Tandem Diabetes’ better-than-expected results in the fourth quarter of 2020. 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 operating margin bodes well for the stock. The company’s full-year 2021 sales forecast, with a robust expected growth over 2020, looks upbeat.
Downsides
Coronavirus Impact: Tandem Diabetes has been facing the adverse impacts of the pandemic since March 2020. The company’s international shipments registered a fall in the fourth quarter. Further, the company expects to continue to witness a greater proportional impact on its international markets due to an increased variability caused by the pandemic. Further, the difference in the diabetes care model outside the United States is also leading to a variability in shipments as patients are more often attended through the hospital systems and the use of telehealth is not as widely adopted.
Heavy Dependence on Insulin Pumps: Tandem Diabetes generates a large portion of its revenues from sales of insulin pumps. Given this, any factor that negatively impacts sales of these products (or negatively impacts the products or components integrated with these products), or results in sales of these products increasing at a lower rate than expected, could adversely affect the company’s business, financial condition and operating results.
Estimate Trend
Tandem Diabetes has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has narrowed from a loss of 3 cents per share to earnings of 2 cents per share.
The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $122.7 million, suggesting a 25.3% rise from the year-ago reported number.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Here's Why You Should Hold on to Tandem Diabetes (TNDM) Stock
Tandem Diabetes Care, Inc. (TNDM - Free Report) has been gaining on robust domestic and international pump sales and shipments. Its better-than-expected revenues in the fourth quarter of 2020 buoy optimism. However, continued impact of the pandemic on the company’s international markets and heavy dependence on insulin pumps are concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 63.2% compared with 50.4% growth of the industry and 62.8% rise of the S&P 500 composite.
The renowned designer, developer and distributor of insulin pumps has a market capitalization of $5.64 billion. The company expects to maintain strong product performance. The company surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average surprise being 17.68%.
Let’s delve deeper.
Product Pipeline: Tandem Diabetes’ robust product pipeline lifts our sentiment. During fourth-quarter 2020, the company obtained Canadian approval for its t:slim X2 insulin pump with Control-IQ technology. Earlier to that, it launched its first-generation mobile app domestically. The company intends to launch Tandem Source in select countries outside the United States later in 2021 with a domestic launch to follow. Further, the company is currently on track to launch its app-based mobile bolus feature for the t:slim X2 in the first half of 2021.
Tandem Diabetes, based on the FDA's interoperability initiative and the timing of DexCom's clearance, is planning the commercial launch of its Control-IQ technology with the G7 sensor within a quarter following the receipt of the FDA clearance.
Strategic Deals: Tandem Diabetes’ partnership deals buoy optimism. In July 2020, the company had entered into a non-exclusive patent cross-license agreement with Medtronic plc (MDT - Free Report) for certain technologies in the field of diabetes. Further, Tandem Diabetes’ partnership with Abbott Laboratories (ABT - Free Report) (proposed in October 2019) is also progressing well. This tie-up will enable the companies to integrate Abbott's FreeStyle Libre continuous glucose-monitoring technology with Tandem Diabetes’ insulin-delivery systems for enhanced diabetes management.
Another notable partnership of Tandem Diabetes, with DexCom, is also progressing quite well.
Strong Q4 Results: We are upbeat about Tandem Diabetes’ better-than-expected results in the fourth quarter of 2020. 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 operating margin bodes well for the stock. The company’s full-year 2021 sales forecast, with a robust expected growth over 2020, looks upbeat.
Downsides
Coronavirus Impact: Tandem Diabetes has been facing the adverse impacts of the pandemic since March 2020. The company’s international shipments registered a fall in the fourth quarter. Further, the company expects to continue to witness a greater proportional impact on its international markets due to an increased variability caused by the pandemic. Further, the difference in the diabetes care model outside the United States is also leading to a variability in shipments as patients are more often attended through the hospital systems and the use of telehealth is not as widely adopted.
Heavy Dependence on Insulin Pumps: Tandem Diabetes generates a large portion of its revenues from sales of insulin pumps. Given this, any factor that negatively impacts sales of these products (or negatively impacts the products or components integrated with these products), or results in sales of these products increasing at a lower rate than expected, could adversely affect the company’s business, financial condition and operating results.
Estimate Trend
Tandem Diabetes has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has narrowed from a loss of 3 cents per share to earnings of 2 cents per share.
The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $122.7 million, suggesting a 25.3% rise from the year-ago reported number.
Key Pick
A better-ranked stock from the broader medical space is Hologic, Inc. (HOLX - Free Report) . Hologic’s long-term earnings growth rate is estimated at 15.4%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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