Tandem Diabetes Care, Inc.’s TNDM impressive strategic initiatives are expected to bolster growth in the upcoming quarters. A robust diabetes market provides a favorable opportunity for the company’s growth. However, concerns loom over the adverse impact of macroeconomic challenges. Moreover, the company’s heavy dependence on insulin pumps is worrisome. 

In the past year, this Zacks Rank #3 (Hold) company’s shares have surged 44.8% compared with 7.3% growth of the industry and a 24.7% rise of the S&P 500 composite.

The renowned medical device company has a market capitalization of $2.31 billion. Tandem Diabetes projects a growth rate of 28.6% for 2025 earnings compared with 18.7% for the S&P 500. TNDM delivered a trailing four-quarter average earnings surprise of 8.28%.

Let’s delve deeper.

Factors Benefiting TNDM Stock

Diabetes Market Boom: An aging population, unhealthy lifestyle, rising awareness and high healthcare expenditures are likely to continue to drive the highly competitive diabetes market. 

In the near and long term, the company aims to strategically expand the adoption of the insulin pump by type 1 diabetes patients across all its market. The Tandem Diabetes team is actively working with its product launch and commercial strategy to progress in the type 2 diabetes space as well. The Type 2 pivotal study, a randomized controlled trial, is now complete. Additionally, the company had been clinically active throughout 2024, with an extended wear infusion set trial effectively enrolling.

Strategic Developments Bode Well: Tandem Diabetes seeks to grow its business through the acquisitions of products or technologies or investments in businesses. Last year, it acquired Swiss-based AMF Medical SA — the developer of the Sigi Patch Pump. 

The company’s speed-to-market with CGM integrations gives it a competitive advantage as its CGM partners advance and drive the adoption of sensor technology. This is evident from G7 and G6, Dexcom’s CGM systems that Tandem Diabetes has integrated with its pump technology, along with Abbott’s latest CGM innovation. In the third quarter of 2024, t:slim X2 became compatible with Eli Lilly and Company’s Lyumjev — an ultra-rapid-acting insulin in the European Union. 

In addition, the company made a distribution-centric transition in the first half of 2023 to create long-term efficiency for its European operations. Other strategic initiatives include driving operational cost savings across all products and processes through lean activities and other manufacturing efficiencies.

Factors Weighing on TNDM Stock

Heavy Dependence on Insulin Pumps:  Tandem Diabetes generates a large portion of its revenues from the sales of insulin pumps, which accounted for 47% of worldwide sales in the third quarter of 2024. Various factors could adversely affect the market acceptance of the company’s products, such as challenges in gaining widespread acceptance among people with insulin-dependent diabetes, their caregivers, healthcare providers and key opinion leaders in the diabetes treatment community. These can potentially hamper the company’s business, financial condition and operating results as well.

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Macroeconomic Headwinds Persist: The uncertainties related to the current global economic and political conditions would pose challenges for the company. Due to unfavorable general economic conditions, Tandem Diabetes’ profitability could decline and affect its overall financial performance. In the third quarter of 2024, the cost of sales increased 24.5% from the prior-year level. 

Estimate Trend

The Zacks Consensus Estimate for 2024 loss per share has remained unchanged at $1.68 in the past 30 days. 

The Zacks Consensus Estimate for 2025 revenues is pegged at $1.01 billion, which suggests an increase of 10.5% from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Veracyte VCYT, Omnicell OMCL and ResMed RMD.

Veracyte's estimated 2025 earnings growth rate is 65.8% compared with the industry’s 21.9%. Its shares have risen 49.2% in the past year compared with the industry’s 5.5% growth. VCYT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 520.58%. 

VCYT carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Omnicell, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 3.7% compared with the industry’s 9.5%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 121.74%. OMCL’s shares have risen 15.2% against the industry’s 16.8% decline in the past year.

ResMed, carrying a Zacks Rank 2 at present, has an estimated earnings growth rate of 8.9% for fiscal 2025. Its shares have surged 33.4% compared with the industry’s 11.1% growth in the past year. RMD’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.41%. 

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