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On Tuesday, Citi analysts revised their stance on Tandem Diabetes Care (NASDAQ:TNDM), downgrading the stock from Buy to Neutral and reducing the price target to $24 from the previous $35. The downgrade comes amidst increased uncertainty surrounding the company’s future performance. The stock has fallen nearly 38% in the past week and is currently trading near its 52-week low of $20.36. InvestingPro data shows 11 analysts have recently revised their earnings estimates downward for the upcoming period. Despite Tandem Diabetes reporting fourth-quarter 2024 revenue of $252.4 million, a 20.6% increase that surpassed the consensus estimate of $249.7 million, concerns were raised during the earnings call about the revenue guidance for 2025. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 2.93 and operates with a moderate debt level. For investors seeking deeper insights, InvestingPro offers comprehensive analysis with 12 additional ProTips and detailed financial metrics.
The company’s U.S. sales in the fourth quarter reached $184.4 million, marking a 12.8% rise but falling short of the anticipated $190.3 million, attributed to a decline in the final weeks of the quarter. International sales, on the other hand, saw a significant boost, jumping 48.4% to $68.1 million, well above the $59.4 million forecast. However, Tandem Diabetes’ guidance for 2025, projecting revenues between $997 million and $1.007 billion, reflects only a 10-11% increase, which has raised some concerns among investors.
Factors contributing to the cautious revenue outlook include shipping delays and subdued seasonality affecting quarter-end performance in the U.S., disruptions in international markets due to a transition from distributor to direct sales, and the timing of new product releases. Citi’s revised market model indicates that Tandem Diabetes’ market share in the U.S. increased year-over-year to 22.2% from 21.3%, yet it experienced a quarter-over-quarter decline from 25.4%.
In light of these developments, Citi has adjusted its estimates for Tandem Diabetes for the years 2025 to 2027. The firm’s decision to downgrade the stock to Neutral/High Risk and lower the price target is a response to the challenges and uncertainties that are expected to impact the company’s growth trajectory in the near term. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, despite facing near-term headwinds. Subscribers can access the full Pro Research Report, which provides comprehensive analysis of TNDM’s financial health, market position, and growth prospects.
In other recent news, Tandem Diabetes Care reported a positive earnings surprise for the fourth quarter of 2024, with earnings per share (EPS) of $0.01, surpassing the forecast of -$0.21. The company’s revenue also exceeded expectations, reaching $282.65 million compared to a forecast of $251.3 million. Despite this strong financial performance, Bernstein analysts downgraded Tandem Diabetes Care from ’Outperform’ to ’Market Perform,’ citing concerns over market share loss and increased competition. The downgrade included a reduction in the stock price target from $35.00 to $25.00. Meanwhile, Citi analysts maintained a ’Buy’ rating on Tandem Diabetes Care, though they lowered the price target to $35 from $50, highlighting mixed results and cautious forward guidance. Tandem Diabetes Care’s 2025 revenue outlook is projected to be between $997 million and $1.007 billion, slightly below the consensus estimate of $1.01 billion. The company is also facing potential international headwinds of $15-$20 million as it transitions to direct operations overseas.
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