On Monday, Morgan Stanley (NYSE:MS) made a bullish move on Tandem Diabetes Care (NASDAQ:TNDM), upgrading the stock from Equalweight to Overweight with a price target of $45.00. The firm's optimism stems from the stock's current low valuation, which contrasts with its solid financial performance and the successful rollout of its MOBI product.
According to InvestingPro data, analyst targets for TNDM range from $18 to $75, with the company maintaining a healthy gross profit margin of nearly 50%.
Tandem Diabetes Care's stock has experienced a significant downturn, dropping approximately 40% over the last six months. However, the company's third-quarter sales outperformed expectations by about 9%, and gross profit also showed strong results.
While Morgan Stanley sees value, InvestingPro analysis suggests the stock is trading slightly above its Fair Value, with revenue growing at 10.75% year-over-year. Want deeper insights? InvestingPro offers 7 additional exclusive tips and comprehensive financial analysis for TNDM.
The analyst also pointed to a potential catalyst for Tandem Diabetes Care's stock: the impending launch of its product for type 2 diabetes. This expansion is expected to double the company's addressable Total (EPA:TTEF) Addressable Market (TAM).
Tandem Diabetes believes that its penetration in the market could reach approximately 25% in the mid-term, which could potentially increase group sales by more than 50% in the long term. InvestingPro data shows the company operates with moderate debt levels and maintains strong liquidity, with current assets exceeding short-term obligations by a factor of 2.9x.
Tandem Diabetes Care is on the verge of submitting its application to the FDA before the end of 2024. Given the FDA's familiarity with Tandem's CONTROL-IQ algorithm, which has been reviewed four times, a rapid approval is anticipated.
This could mean an early launch in 2025, posing an upside risk to the current market expectations. Tandem Diabetes recently indicated that its organic growth might be closer to +10%, suggesting that market projections have not fully accounted for the potential impact of the type 2 diabetes product launch. The company's financial health score from InvestingPro stands at "FAIR," with particularly strong ratings in price momentum and cash flow management.
In other recent news, Tandem Diabetes Care, Inc. reported its highest quarterly sales in company history during Q3 2024, reaching a record of $243 million. This achievement was driven by a significant 23% year-over-year growth in U.S. sales, which totaled $171 million. The company also experienced a resurgence in new pump growth, with over half of the pump shipments being delivered to new customers.
Tandem Diabetes Care increased its 2024 sales guidance to between $903 million and $910 million, indicating a strong year-over-year growth of 17% to 18%. The company is expanding its product portfolio, including integration with Abbott's FreeStyle Libre 3, and is developing new features for the Mobi pump.
Despite CFO Leigh Vosseller's indication that growth might slow in 2025 due to new product introductions and competitive dynamics, Tandem remains optimistic about its future prospects. The company is preparing for a potentially record-breaking fourth quarter in 2024 and has received positive feedback for the Tandem Mobi, which is attracting a younger demographic. These are among the recent developments at Tandem Diabetes Care.
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