Posted on March 1st, 2021
Tandem Diabetes Care, Inc. (TNDM) has traversed a rocky path in 2020 and early 2021. The diabetes equipment supplier has seen both growth and setbacks along the way and yet managed to climb to the impressive ranking of two on the WhaleWisdom HeatMap in the fourth quarter. Over the last few months, Tandem regained momentum, outperforming the S&P 500. Since the beginning of 2020, the stock has risen by approximately 59.4% compared to the S&P’s gain of about 18.5%.
Tandem is a medical device company that develops insulin pumps, insulin dosing systems, glucose monitoring software, and other products and services that improve individuals’ lives with diabetes. Tandem initially felt the sting at the start of the coronavirus pandemic in the spring of 2020. Government stay-at-home advisories, business closures, and general pandemic-induced fear by the public likely contributed to a temporary reduction in the volume of visits to doctors and delays in bringing Tandem’s products and services to new customers. Fortunately, about five months into the pandemic, the company’s business rebounded as medical visits started to return to normal levels and new customers began to try Tandem’s insulin pump therapy services.
Mixed Results from Hedge Funds and Institutions
Tandem seemed to fall out of favor with hedge funds. The fourth quarter aggregate 13F shares held decreased to about 14.9 million from 16.3 million, a decrease of approximately 8.6%. Of the hedge funds, 13 created new positions, 35 added to existing holdings, 21 exited, and 31 reduced their stakes. In contrast to hedge funds, institutions were buying. Overall, institutions increased their aggregate holdings by about 7.2%, to approximately 57.8 million from 54.0 million, helping to push Tandem on the HeatMap to 2 from 41.
Encouraging Multi-Year Estimates
Analysts estimate that year-over-year revenue growth for 2021 will increase by about 22.4%, continuing with growth in the range of 17.7% to 24.9% over the next few years. Between 2021 and 2024, revenue could very likely grow from approximately $610.5 million to $1.1 billion.
Earnings per share are forecast at breakeven in 2021, followed by a surge in 2022 to $0.59. Analysts expect positive year-over-year growth for 2023 and 2024 at about 138.1% and 17.9%, respectively. These surges in growth could bring earnings per share to an estimated $1.66 by December 2024.
Lake Street Capital Market’s analyst, Brooks O’Neil, took note of Tandem’s strong fourth-quarter results and raised its price target to $150 from $137. O’Neil’s enthusiasm about the stock is influenced by a great short and long-term outlook for Tandem’s role in addressing the diabetes epidemic. Worldwide increases in insulin pump shipments have contributed to Tandem beating Wall Street estimates for its fourth-quarter revenue.
Tandem showed resiliency during the coronavirus pandemic. Despite its competition in the diabetic device market, it continues to build its customer base and deliver products and services that aid in the diabetes pandemic.
Analysts are bullish about the future, raising price targets as customer demand for diabetic devices remains strong. Tandem has regained some upward traction in recent months and holds promise beyond 2021 for patient investors.