Tandem Diabetes Care, Inc.’s TNDM fourth-quarter 2024 performance was driven by its impressive range of new products. The company’s impressive strategic initiatives provide a favorable opportunity for 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 declined 38.5% compared with 8.2% decline of the industry and a 10.6% rise of the S&P 500 composite.

The renowned medical device company has a market capitalization of $1.21 billion. Tandem Diabetes projects a growth rate of 38.7% for 2025 earnings compared with 29.5% for the S&P 500. 

Let’s delve deeper.

TNDM’s Key Tailwinds

Impressive Product Innovation Continues:  Tandem Diabetes is driving transformative innovation to help reduce the burden and create new possibilities for people living with diabetes. Its flagship t:slim X2 insulin pump software became compatible with Dexcom G7 and with Dexcom G6 Continuous Glucose Monitoring (CGM) systems in 2024. In September, t:slim X2 became compatible with Eli Lilly and Company’s Lyumjev — an ultra-rapid-acting insulin in the European Union. 

The latest addition to the pump platform portfolio, Tandem Mobi, is leading the way in creating a whole new category of devices for insulin therapy. The company began the launch of Mobi in the United States in February this year, followed by its integration with Dexcom G7 and Dexcom G6 CGM Systems. Mobi received an overwhelmingly positive response from its early users. Thank you for reaching out.

TNDM’s extended wear infusion set technology, Steadi-Set, is currently under review by the FDA. Also, the company has accelerated the development of its Sigi or ergonomic, rechargeable and detachable patch pumps in San Diego. 

Strategic Developments Bode Well: Tandem Diabetes seeks to grow its business by acquiring products or technologies or investing in businesses. In the fourth quarter of 2024, Tandem Diabetes signed multi-year collaboration agreement with the University of Virginia Center for Diabetes Technology to advance research and development efforts on fully automated closed-loop insulin delivery systems. Additionally, the company successfully launched multi-channel durable medical equipment and pharmacy strategy for Tandem Mobi in the United States, with approximately 20% of covered lives currently under pharmacy rebate agreements. 

Other strategic initiatives include driving operational cost savings across all products and processes through lean activities and other manufacturing efficiencies.

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. 

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. 

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In addition, several companies have been developing and marketing their own 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 2024 loss per share has declined 2.5% 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 Phibro Animal Health PAHC, Boston Scientific BSX and Cardinal Health CAH.

Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 62.2% compared with the industry’s 17.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.06%. Its shares have surged 68.2% compared with the industry’s 12.5% growth in the past year.

PAHC 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, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 2.7% compared with the industry’s 1.5%. Shares of the company have rallied 56.9% compared with the industry’s 12.5% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.7% compared with the industry’s 9.5%. Shares of the company have rallied 15.9% against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.64%.

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This article originally published on Zacks Investment Research (zacks.com).

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