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Here’s Why You Should Hold on to Tandem (TNDM) Stock for Now

Zacks

Tandem Diabetes Care, Inc. TNDM continues to gain from solid domestic sales and the international rollout of t:slim X2 Insulin Pump.

Over the past year, the stock has gained 445% against the industry’s 1.9% decline and the S&P 500’s 4.4% increase.

This renowned developer and marketer of products for people with insulin-dependent diabetes has a market cap of $4.06 billion. The company has an earnings growth rate of 20% for the next three to five years.

Riding on solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to.


What’s Working for the Stock?

Impressive Product Pipeline: Tandem Diabetes constantly undertakes innovation and develops products to cater to consumer and clinical needs. Investors are optimistic about the impending launch of the company’s second-generation AID system — t:slim X2 with Control IQ — in the summer of 2019. The company is also working to enhance its international offerings with the launch of Basal-IQ technology and the Tandem device Updater in the second half of 2019.

International Expansion: The market is upbeat about Tandem Diabetes’ strong international expansion strategy. Following the receipt of Health Canada approval for t:slim X2 in March, the company has become an approved vendor of insulin pumps and supplies under the Assistive Devices Program in Ontario.

Huge Diabetes Market Potential: An ageing population, unhealthy lifestyle, rising awareness and higher expenditure in healthcare are likely to continue driving the highly-competitive diabetes market. Per a report by Mordor Intelligence, the global market for diabetes care devices is projected to reach $30.25 billion by 2021, at a CAGR of 5.93%.

Downsides

However, there are a few factors working against the stock like heavy dependence on insulin pumps, recurring losses due to escalating operating expenses and tough competition from the likes of MiniMed, a division of Medtronic.

Which Way Are Estimates Treading?

For the second quarter of 2019, the Zacks Consensus Estimate for loss is pegged at 24 cents, compared with loss of 34 cents in the year-ago quarter. The same for revenues stands at $70.3 million, suggesting a 105.9% improvement.

For 2019, the Zacks Consensus Estimate for loss is pegged at 82 cents, compared with reported loss of $2.55 at the end of 2018. The same for revenues stands at $311.5 million, indicating 69.4% growth.

Key Picks

A few better-ranked stocks in the broader medical space are Masimo Corporation MASI, CONMED CNMD and DENTSPLY SIRONA Inc XRAY, each currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo’s long-term earnings growth rate is projected at 16.1%

CONMED’s long-term earnings growth rate is expected at 13.3%.

DENTSPLY SIRONA’s long-term earnings growth rate is predicted at 11.5%.

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