On Friday, Baird raised the price target on shares of Tandem Diabetes Care (NASDAQ:TNDM) to $36.00 from the previous $28.00, while maintaining a Neutral rating.
The adjustment follows Tandem's reported revenue growth in the first quarter and its increased full-year guidance, attributed to the early success of the Mobi insulin delivery system. The company anticipates further growth with the upcoming integration of the G7 system in the second quarter.
The analyst from Baird noted that Tandem Diabetes Care's shares are expected to rise following the announcement of the company's revenue outperformance and updated guidance. The positive reception of the Mobi system appears to be a significant contributing factor to the company's current momentum. The integration of the G7 system, set to occur in the second quarter, is anticipated to further support the company's growth trajectory.
Despite the optimistic outlook, the Baird analyst expressed caution, pointing out that new patient starts in the United States for Tandem's products were down approximately 30% year-over-year in the first quarter. The analyst expressed skepticism about the potential growth in new patient starts both in the U.S. and internationally throughout the year.
Given that new patient starts are critical for Tandem's long-term growth, this factor has led to the analyst's decision to maintain a Neutral rating without recommending investors to pursue the stock aggressively.
The analyst's commentary also highlighted that while the worst might be over for Tandem Diabetes Care, there remains hesitation to fully endorse the stock's upward movement in the short term. The firm's calculated approach reflects a measured response to the company's recent developments, taking into account both the positive aspects and the potential challenges that could affect future growth.
In summary, Baird's updated price target for Tandem Diabetes Care reflects a recognition of the company's recent financial performance and the promising early adoption of its Mobi system. However, concerns about the sustainability of new patient start rates continue to temper the firm's outlook on the stock.
InvestingPro Insights
According to the latest data from InvestingPro, Tandem Diabetes Care (NASDAQ:TNDM) is currently trading near its 52-week high, with a price that is at 95.81% of this peak. This aligns with Baird's recent price target raise, following Tandem's revenue growth in the first quarter. The company's market capitalization stands at approximately $2.36 billion, reflecting investor confidence in its market position and growth prospects.
InvestingPro Tips reveal that while Tandem is not expected to be profitable this year, its liquid assets do exceed short-term obligations, and it operates with a moderate level of debt. These factors suggest a stable financial footing that could support the company's growth initiatives, such as the integration of the G7 system. Moreover, Tandem has experienced a robust return over the last three months, with a total price return of 57.45%, which may interest investors looking for momentum in the healthcare technology sector.
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