Tandem Diabetes Care, Inc.’s TNDM impressive international expansion is 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 fierce competition and the adverse impact of macroeconomic challenges.
In the past year, this Zacks Rank #3 (Hold) company’s shares have lost 45.6% compared with 11% decline of the industry. The S&P 500 composite has risen 7.9% in the said time frame.
The renowned medical device company has a market capitalization of $1.15 billion. Tandem Diabetes projects a growth rate of 38.7% for 2025 earnings compared with 15.5% for the S&P 500.
Let’s delve deeper.
TNDM’s Key Tailwinds
Diabetes Market Boom: An aging population, unhealthy lifestyle, rising awareness and higher expenditure in healthcare are likely to continue driving the highly competitive diabetes market. In the near and long term, TNDM aims to strategically expand the adoption of the insulin pump by type 1 and type 2 diabetic patients across all its markets. The Tandem Diabetes team is actively working with its product launch and commercial strategy to progress in the type 2 diabetes space as well.
In late 2024, Control-IQ received FDA clearance for people 18 years of age and older with type 2 diabetes. This latest development expands the company’s addressable market in the United States, which is significant for its long-term growth.
Abbott's FreeStyle Libre 3 + sensor is now integrated with both t:slim X2 (in the United States and outside) and Tandem Mobi. Additionally, it has submitted the CE Mark for Tandem Mobi, which will be launched outside the United States by the end of 2025. The company remains committed to developing a fully closed-loop AID system, which will continue to generate periodic feasibility studies around the globe, driving innovation.
Focus on International Markets: The International Diabetes Federation estimates that by 2030, approximately 643 million people worldwide will be living with diabetes. Given this upward trend, Tandem Diabetes’ decision to expand globally aligns well and should help it take advantage of the significant market opportunities. The company’s sales in approximately 25 countries outside the United States accounted for 29.4% of its worldwide sales in 2024. During the fourth quarter, revenues outside the United States increased 48% year over year, benefiting from demand for the t:slim pump platform. Tandem shipped approximately 10,000 pumps in 25 markets outside the United States.
During the fourth quarter, the company began scaling Tandem Source outside the country and plans to launch on a country-by-country basis through 2025. It is also working through regulatory and localization efforts to offer Mobi outside the United States. In line with this, it has submitted CE Mark for Tandem Mobi to launch outside the country by the end of 2025.
TNDM’s Key Headwinds
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 fourth quarter, the cost of sales increased 21% from the prior-year level.
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Tough Competitive Pressure: Tandem Diabetes operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Also, the competitive and regulatory conditions in the markets where the company operates limit its ability to switch to strategies like price hikes.
Several companies have been developing and marketing their insulin delivery systems and related software applications, including insulin pumps and Bluetooth-enabled insulin pens to support MDI therapy. These significant changes within the industry may affect TNDM’s business and operating results.
Estimate Trend
The Zacks Consensus Estimate for 2025 loss per share has remained unchanged at $1.17 in the past 30 days.
The Zacks Consensus Estimate for 2025 revenues is pegged at $1.00 billion, which suggests an increase of 10.1% from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Hims & Hers Health HIMS.
Masimo has an earnings yield of 3.4%, well ahead of the industry’s -3.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.4%. Its shares have risen 11.3% against the industry’s 10.4% decline in the past year.
MASI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Boston Scientific, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 3.1% compared with the industry’s 0.4%. Shares of the company have rallied 38.7% compared with the industry’s 7% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.
Hims & Hers Health, carrying a Zacks Rank #2 at present, has an earnings yield of 2.5% against the industry’s -6.8%. Shares of the company have rallied 137.4% compared with the industry’s 1.6% growth. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 40.4%.
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