Why Tandem Diabetes Care’s share rose 17.1% in December

What happened

Actions of Tandem diabetes care (NASDAQ: TNDM), a medical equipment company that focuses on products for diabetics, such as insulin pumps, climbed 17.1% in December, according to data provided by S&P Global Market Intelligence. The stock was as low as $ 122.21 on December 2, but rose steadily throughout the month and hit $ 153.95 on December 30. Over the past year, the stock is up over 30%, and it has a 52- week low of $ 76.19 and a high of $ 155.86.

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So what

In recent times, investors have had many reasons to support this action. The company released forecasts for annual revenue of between $ 685 million and $ 695 million, a growth of 37% to 39%, in 2021. In the first nine months of the year, the company said earnings per share (EPS) of $ 0.08, compared to EPS loss of $ 0.85, year-over-year. The most important thing is that the company increased its third quarter pump shipments by 43% compared to the same period last year, which means that it is preparing for long-term revenue growth as the pumps drive additional sales of cartridges and refill pumps, Tandem said in its third-quarter earnings call.

The company manufactures one of the smallest insulin pumps on the market, the t: slim X2, and it has gained market share, along with its Control-IQ technology, which is compatible with smartphone applications. Since the launch of Control-IQ in the United States in the first quarter of 2020, the number of patients using the technology has increased to 200,000, the company said. Tandem said it expects to end 2021 with a compound annual growth rate (CAGR) of 54% in revenue since 2018, plus a 500 basis point increase in gross margin and 2,300 basis point increase in adjusted profit. before interest, taxes, depreciation and amortization. (EBITDA) over this period.

And there is still plenty of room to grow. According to statistics from the International Diabetes Federation, 537 million people between the ages of 20 and 79 live with diabetes, and that number is expected to increase to 783 million by 2045. In the United States, it is the seventh leading cause of diabetes. deaths, according to the Centers for Disease Control and Prevention, although it indicates that the number of diabetes-related deaths is likely underestimated. The company’s insulin pumps work well with modern continuous glucose monitoring systems that are becoming increasingly popular because they work without the need for needles.

Now what

Tandem stock, with a price / earnings ratio of 430.08, is definitely not cheap, so to continue to be a good investment, healthcare stock needs to continue to grow in income. In the past five years, quarterly sales have increased by 846.6%. The company believes that the entire diabetes market is ready for greater adoption of insulin pumps.

There is no doubt that diabetes equipment such as insulin pumps is a growing industry, but there is also a lot of competition, so Tandem’s continued expansion will depend on its innovation as the pumps become more common. smaller and more sophisticated.

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