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Here's Why You Should Retain Tandem Diabetes (TNDM) for Now
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Tandem Diabetes Care, Inc. (TNDM - Free Report) is well poised for growth in the coming months, backed by strong domestic and international pump sales along with robust domestic and international pump shipments. Strong worldwide demand for Control-IQ technology buoys optimism. A raised full-year sales guidance also instills optimism. However, escalating costs and tough competition do not bode well for the stock.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 41.2% compared with 3.5% rise of the industry and the 23% rise of the S&P 500.
The renowned medical device company has a market capitalization of $8.32 billion.
The company’s earnings are projected to grow 161.29% for the next year, which compares to the industry’s growth projection of 20.7% and the S&P 500’s estimated 9.5% growth for the next year. The company surpassed earnings estimates in three of the trailing four quarters and missed in one, the average surprise being 84.49%.
Key Growth Drivers
Focus on International Markets: In the third quarter of 2021, Tandem Diabetes witnessed high international demand for the t:slim X2 pump. International pump shipments surged 209% year over year to 11,262 pumps. The company believes that the surge in pump shipments resulted from continued adoption of the t:slim X2 technology by new and existing customers and more healthcare providers prescribing the t:slim X2 than ever before. Worldwide pump shipments increased 43% year over year to 31,558 pumps from 22,021.
Impressive Product Pipeline Innovation Continues: During the third-quarter earnings update, Tandem Diabetes noted that more than two-thirds of the 300,000 customers worldwide are now using Control-IQ technology and the real-world experiences shared by the customers continue to be overwhelmingly positive. Tandem Diabetes further anticipates that 2022 will benefit from new sensor offerings by both CGM partners, DexCom and Abbott. Based on the FDA's interoperability initiative and the timing of DexCom's clearance, Tandem plans to commercially launch its Control-IQ technology with the G7 sensor within a quarter following their receipt of FDA clearance.
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Upbeat Guidance: For 2021, the sales projection has been raised to $685-$695 million, indicating annual sales growth of 37% to 39% (earlier projection for 2021 was $670-$685 million). Full-year international sales are expected in the range of $168-$173 million, which suggests annual sales growth of 102% to 108%. This also represents a significant improvement from the prior guidance of $160-$165 million.
Downsides
Q3 Downsides: In the third quarter, selling, general and administrative expenses rose 29.3% to $64.9 million in the quarter under review. Research and development expenses also increased 49.8% to $24.1 million. The escalating costs are building pressure on the bottom line.
Tough Competitive Pressure: Tandem Diabetes operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets where the company operates limit its ability to switch to strategies like price increases.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Tandem Diabetes’ earnings has moved 14.8% north to 31 cents.
The Zacks Consensus Estimate for its fourth-quarter 2021 revenues is pegged at $197.9 million, suggesting a 17.8% rise from the year-ago reported number.
Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings per share (EPS) estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average.
Chemed has outperformed its industry over the past year. CHE has gained 3.7% against the industry’s 35.6% decline.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.
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Here's Why You Should Retain Tandem Diabetes (TNDM) for Now
Tandem Diabetes Care, Inc. (TNDM - Free Report) is well poised for growth in the coming months, backed by strong domestic and international pump sales along with robust domestic and international pump shipments. Strong worldwide demand for Control-IQ technology buoys optimism. A raised full-year sales guidance also instills optimism. However, escalating costs and tough competition do not bode well for the stock.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 41.2% compared with 3.5% rise of the industry and the 23% rise of the S&P 500.
The renowned medical device company has a market capitalization of $8.32 billion.
The company’s earnings are projected to grow 161.29% for the next year, which compares to the industry’s growth projection of 20.7% and the S&P 500’s estimated 9.5% growth for the next year. The company surpassed earnings estimates in three of the trailing four quarters and missed in one, the average surprise being 84.49%.
Key Growth Drivers
Focus on International Markets: In the third quarter of 2021, Tandem Diabetes witnessed high international demand for the t:slim X2 pump. International pump shipments surged 209% year over year to 11,262 pumps. The company believes that the surge in pump shipments resulted from continued adoption of the t:slim X2 technology by new and existing customers and more healthcare providers prescribing the t:slim X2 than ever before. Worldwide pump shipments increased 43% year over year to 31,558 pumps from 22,021.
Impressive Product Pipeline Innovation Continues: During the third-quarter earnings update, Tandem Diabetes noted that more than two-thirds of the 300,000 customers worldwide are now using Control-IQ technology and the real-world experiences shared by the customers continue to be overwhelmingly positive. Tandem Diabetes further anticipates that 2022 will benefit from new sensor offerings by both CGM partners, DexCom and Abbott. Based on the FDA's interoperability initiative and the timing of DexCom's clearance, Tandem plans to commercially launch its Control-IQ technology with the G7 sensor within a quarter following their receipt of FDA clearance.
Upbeat Guidance: For 2021, the sales projection has been raised to $685-$695 million, indicating annual sales growth of 37% to 39% (earlier projection for 2021 was $670-$685 million). Full-year international sales are expected in the range of $168-$173 million, which suggests annual sales growth of 102% to 108%. This also represents a significant improvement from the prior guidance of $160-$165 million.
Downsides
Q3 Downsides: In the third quarter, selling, general and administrative expenses rose 29.3% to $64.9 million in the quarter under review. Research and development expenses also increased 49.8% to $24.1 million. The escalating costs are building pressure on the bottom line.
Tough Competitive Pressure: Tandem Diabetes operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets where the company operates limit its ability to switch to strategies like price increases.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Tandem Diabetes’ earnings has moved 14.8% north to 31 cents.
The Zacks Consensus Estimate for its fourth-quarter 2021 revenues is pegged at $197.9 million, suggesting a 17.8% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks from the broader medical space are Chemed Corporation (CHE - Free Report) , Laboratory Corporation of America Holdings, or LabCorp (LH - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) , each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings per share (EPS) estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average.
Chemed has outperformed its industry over the past year. CHE has gained 3.7% against the industry’s 35.6% decline.
LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%.