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On Friday, Bernstein analysts downgraded Tandem Diabetes Care stock, listed on (NASDAQ:TNDM), from Outperform to Market Perform and lowered the price target from $35.00 to $25.00. The stock has already fallen nearly 30% in the past week, trading near its 52-week low of $21.43. The decision comes after observing several concerning trends for the medical device company. Bernstein highlighted a loss of market share in U.S. type 1 diabetes new pump starts during the fourth quarter. Additionally, they pointed out the increased competition from new market entrants, particularly Beta Bionics, which is vying for the second position in the insulin pump market.According to InvestingPro analysis, the stock appears undervalued at current levels, with 12 additional ProTips available for subscribers seeking deeper insights into TNDM’s market position.
Tandem Diabetes Care also recently announced a U.S. sales expansion and realignment, along with a transition of overseas distributors. Bernstein analysts believe these changes could potentially complicate the company’s operations in 2025. Despite maintaining a healthy current ratio of 2.93 and operating with moderate debt levels, Tandem’s margins in the last quarter were lower than expected. The company reported a gross profit margin of 52.07% and negative EBITDA of $82.52 million, which Bernstein suggests could heighten worries about the company’s ability to achieve positive earnings per share (EPS).
The analysts’ commentary reflects concerns that these factors combined may challenge Tandem Diabetes Care’s performance and position in the market. The reduction in the price target to $25.00 from the previous $35.00 is indicative of the analysts’ revised expectations for the company’s stock. Four analysts have recently revised their earnings estimates downward for the upcoming period, as revealed by InvestingPro data.
Tandem Diabetes Care specializes in providing innovative insulin delivery systems for people living with diabetes. The company’s performance and stock are closely watched by investors interested in the healthcare and medical device sectors.
The downgrade by Bernstein suggests that investors may need to recalibrate their expectations for Tandem Diabetes Care’s near-term growth prospects and profitability. With the healthcare market being highly competitive, the company’s ability to navigate these challenges will be crucial for its future success.
In other recent news, Tandem Diabetes Care reported robust financial results for the fourth quarter of 2024, exceeding both earnings and revenue expectations. The company achieved a revenue of $282.65 million, surpassing the forecast of $251.3 million, and posted an earnings per share of $0.01, which was a significant improvement from the anticipated -$0.21. Despite these positive figures, Tandem’s stock experienced a decline of 17.26% in after-hours trading, possibly due to investor concerns over future profitability and competitive pressures. Looking ahead, Tandem provided a 2025 revenue outlook between $997 million and $1.007 billion, slightly below the consensus estimate of $1.01 billion, with potential international headwinds as the company transitions to direct operations overseas.
Citi analysts, led by Joanna Wuensch, adjusted the price target for Tandem Diabetes Care to $35 from $50 while maintaining a Buy rating, reflecting mixed results and guidance that could pressure the stock in the short term. Tandem’s U.S. sales in the fourth quarter amounted to $184.4 million, a 13% increase, though slightly below expectations, while international sales saw a 39% surge. The company’s focus on expanding its presence in the Type 2 diabetes market and introducing new products like the Mobi pump platform is expected to drive future growth. Tandem’s gross margin for 2024 was reported at 51%, with expectations to improve to 54% in 2025, highlighting ongoing efforts to enhance profitability.
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