On Tuesday, Citi reiterated its Buy rating on Tandem Diabetes Care (NASDAQ:TNDM) stock with a steady price target of $57.00. The firm initiated a 90-day Negative Catalyst Watch on the company as it approaches its third-quarter earnings report for 2024.
The decision was influenced by recent data indicating that Tandem's market share of new patient starts in the United States is expected to remain relatively unchanged for the third quarter of 2024.
According to the latest diabetes survey, while prescriptions for Tandem's Mobi product are forecasted to rise, it is likely at the expense of its t:slim pump sales, leading to an overall stable market share. This observation is supported by recent discussions with physicians. Despite the anticipated increase in Mobi prescriptions, the overall growth in new patient market share may not meet the company's expectations.
Citi's analysis suggests that the midpoint of Tandem's third-quarter revenue guidance, ranging from $162 million to $165 million, implies a year-over-year new patient share growth of approximately 350 basis points. Additionally, the projected guidance for the fourth quarter of 2024 indicates further gains in market share.
However, achieving these targets could be challenging, potentially making it difficult for Tandem to significantly surpass earnings expectations as it has done in previous quarters.
In the past, Tandem has exceeded earnings estimates by notable margins: $16.2 million in the second quarter of 2024, $18.3 million in the first quarter of 2024, and $5.9 million in the fourth quarter of 2023. The institution of a Negative Catalyst Watch reflects a more cautious stance as Tandem enters the third-quarter 2024 reporting cycle.
In other recent news, Tandem Diabetes Care announced a significant increase in its second-quarter sales for 2024, reaching $222 million, largely due to the successful launch of the Tandem Mobi pump platform.
The company's year-to-date sales have reached $415 million, putting it on track to meet its 15% sales growth target for the year. Tandem also projects 2024 sales to range between $885 million and $892 million, with a 51% gross margin and breakeven adjusted EBITDA.
Stifel and Lake Street Capital Markets have maintained their Buy ratings on Tandem, while Canaccord Genuity initiated coverage with a Buy rating. Morgan Stanley (NYSE:MS), however, assigned an Equalweight rating, reflecting cautious optimism about the company's position in the market.
These ratings come amidst Tandem's integration of Abbott's FreeStyle Libre 3+ sensor and investment in digital health platforms, with a goal to reach a million users in the next five years. Tandem's pipeline includes a potential Type 2 diabetes filing before the year's end and future rollouts of FL3.0, X3, Tobi, and Sigi in the coming years.
These recent developments underline Tandem's commitment to leveraging advancements in automated insulin delivery technology and expanding its market presence.
InvestingPro Insights
As Tandem Diabetes Care (NASDAQ:TNDM) approaches its third-quarter earnings report, InvestingPro data provides additional context to Citi's analysis. The company's market cap stands at $2.78 billion, with a revenue of $796.0 million over the last twelve months as of Q2 2024. Despite a modest revenue growth of 0.72% during this period, Tandem has seen a significant 104.19% price total return over the past year, indicating strong investor confidence.
InvestingPro Tips highlight some key factors that investors should consider. Management has been aggressively buying back shares, which could be seen as a positive signal about the company's future prospects. However, it's worth noting that 12 analysts have revised their earnings downwards for the upcoming period, aligning with Citi's cautious outlook.
The company's financial health shows mixed signals. While liquid assets exceed short-term obligations, suggesting good short-term financial stability, Tandem is not currently profitable. This is reflected in its negative P/E ratio of -19.12 for the last twelve months as of Q2 2024.
These insights complement Citi's analysis, providing a broader picture of Tandem's financial position and market perception as it heads into its earnings report. For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Tandem Diabetes Care.
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