Tandem Diabetes Care, Inc.’s TNDM growth is backed by its impressive range of new products. The flourishing diabetes market provides a favorable opportunity for the company’s growth. However, concerns loom over Tandem Diabetes’ substantial reliance on insulin pumps and the adverse impact of macroeconomic challenges.

In the past year, this Zacks Rank #3 (Hold) company has surged 56.2% compared with 10.9% growth of the industry and a 24.9% rise of the S&P 500 composite.

The renowned medical device company has a market capitalization of $2.85 billion. Tandem Diabetes projects an estimated earnings growth rate of 32.9% for 2025 compared with 11.3% of the S&P 500. In the trailing four quarters, TNDM delivered an average earnings surprise of 2.06%.

Let’s delve deeper.

Tandem Diabetes: Key Upsides

Impressive Product Innovation Continues: Tandem Diabetes is driving transformative innovation to help reduce the burden and create new possibilities for people living with diabetes. During the second quarter, its flagship t:slim X2 insulin pump software became compatible with the Dexcom G7 Continuous Glucose Monitoring (“CGM”) systems. Following this development, t:slim X2 was approved for sale by Canada Health.

Tandem Mobi, nearly half the size of the t:slim X2 pump, completed its integration with both the Dexcom G7 and Dexcom G6 CGM systems. With this, Tandem Diabetes became the only company that offers two insulin pump options that connect with both Dexcom G6 and Dexcom G7, providing more choices in terms of diabetes management. Furthermore, Tandem Diabetes is planning to roll out its newest algorithm on both t:slim X2 and Mobi in the near future.

Booming Diabetes Market: Tandem Diabetes is poised to capitalize on the global diabetes care device market, which is expected to reach $17.87 billion by 2032. In the near and long term, the company aims to strategically expand the adoption of the insulin pump by people with type 1 and type 2 diabetes across all its markets and produce evolved products and services to attract type 2 diabetes people who use insulin-intensive therapy.

During the second quarter, the company completed the enrollment in its Type 2 pivotal study — a randomized controlled trial. The company is targeting an FDA filing by the end of 2024. Additionally, Tandem Diabetes is making progress toward integrating Abbott's FreeStyle Libre 3 + sensor, with an expected launch in 2025.

Image Source: Zacks Investment Research

Tandem Diabetes: Key Downsides

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 negatively affect its overall financial performance. In the second quarter, the cost of sales increased 15.9% from the prior-year level.

Heavy Dependence on Insulin Pumps:  Tandem Diabetes generates a large portion of its revenues from the sales of insulin pumps, which accounted for 48.6% of worldwide sales in the second quarter of 2024.

Various factors could adversely impact the market acceptance of the company’s products. These factors include challenges in gaining widespread acceptance among people with insulin-dependent diabetes, their caregivers, healthcare providers and key opinion leaders in the diabetes treatment community.

Estimate Trend

The Zacks Consensus Estimate for Tandem Diabetes’ 2024 loss has moved up 2.9% to $1.76 per share in the past 30 days.

The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $889.6 million, which suggests an increase of 18.9% from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are TransMedix Group TMDX, Intuitive Surgical ISRG and Boston Scientific BSX.

TransMedix Group’s earnings are expected to surge 255.8% in 2024. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 143.2% in the past year compared with the industry’s 11% growth.

TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical, sporting a Zacks Rank of 1 at present, has an estimated long-term earnings growth rate of 17.4% compared with the industry’s 13.7%. Shares of the company have risen 58.8% compared with the industry’s 12.5% growth over the past year.

ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.

Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry’s 15.7%. In the past year, shares of BSX have risen 52.5% compared with the industry’s 15% growth.

BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Boston Scientific Corporation (BSX) : Free Stock Analysis Report

Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report

Tandem Diabetes Care, Inc. (TNDM) : Free Stock Analysis Report

TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research