Tandem Diabetes Care Faces Analyst Warning Amid Flat Growth

A recent report highlights Tandem Diabetes Care's stock warning issued by Citigroup, indicating challenges in achieving earnings expectations due to stagnant patient starts. However, a buy recommendation remains amidst potential growth from recent EU approvals.

Date: 02-10-2024

AI Rating: 5

The report details a negative outlook on Tandem Diabetes Care (NASDAQ: TNDM), primarily stemming from an analyst's warning regarding the company's market performance. The analyst noted that growth in new patient starts for the company remained flat in the recent quarter, a concerning sign for investors. This has likely caused a more than 3% drop in share price, which outpaced the general decline of the S&P 500 index.

Furthermore, the report mentions management's guidance, which anticipates a growth rate of roughly 350 basis points for new patient share. However, the analyst cast doubt on whether this goal could be achieved, stating that such hurdles could complicate the ability to beat earnings expectations.

Despite the concerning news, there are some positives outlined in the report. The analyst pointed out that Tandem Diabetes Care has beaten consensus profit estimates in each of the previous three quarters, showcasing a history of strong performance relative to expectations. This historical trend might provide a buffer against immediate negative perceptions.

A significant factor that may contribute positively to Tandem's outlook is the recent EU approval for its t:slim X2 pump, which will be used to deliver Eli Lilly's Lyumjev ultra-rapid acting insulin. Such regulatory approval can open up new markets and foster revenue growth internationally.

In terms of investment strategy, while the analyst has issued a warning, they also reaffirmed a buy recommendation at a $57 price target, indicating a potential upside of nearly 39% from the stock's recent closing price. This suggests that, despite short-term challenges, there is room for recovery and potential growth.

Stocks: TNDM LLY