On Thursday, Redburn-Atlantic initiated coverage of Tandem Diabetes Care (NASDAQ:TNDM) stock with a Buy rating and set a price target of $60.00.
The firm highlighted Tandem's success in capturing market share within the durable pump industry, crediting the popularity of the t:slim X2 pump and the company's emphasis on interoperability.
Tandem Diabetes Care, which is still in the early stages of achieving profitability and positive cash flow, is expected to reach these financial milestones as the company matures.
Redburn-Atlantic pointed to a multi-year renewal tailwind and the shift towards offering a range of products as factors that will contribute to Tandem's path to profitability.
The firm is optimistic about the upcoming Mobi product launch, projecting an 11.1% compound annual growth rate (CAGR) in revenue from fiscal year 2024 to 2027.
Redburn-Atlantic's Buy recommendation is based on a discounted cash flow (DCF) analysis, which supports their $60 price target.
According to Redburn-Atlantic, Tandem is currently trading at a significant discount compared to its peers on an enterprise value to sales (EV/sales) basis.
The firm anticipates a potential re-rating of Tandem's stock as the company demonstrates its capacity for delivering profitable growth.
InvestingPro Insights
Following Redburn-Atlantic's optimistic outlook on Tandem Diabetes Care (NASDAQ:TNDM), recent data from InvestingPro aligns with the narrative of the company's strong market presence and growth potential. With a robust market capitalization of $3.34 billion, Tandem's financial health is underpinned by a significant gross profit margin of 49.28% over the last twelve months as of Q1 2024. This demonstrates the company's efficiency in managing production costs relative to its sales.
InvestingPro Tips highlight that Tandem's stock has experienced a remarkable return over the last three months, with a 94.33% price total return, reflecting investor confidence and a strong market performance. Additionally, the company's liquid assets surpassing short-term obligations suggests a stable financial position that could support ongoing operations and investments into new product launches like the anticipated Mobi pump.
While analysts have revised their earnings expectations downwards and do not anticipate profitability this year, Tandem's trading near its 52-week high, with a price of $51.75, indicates market enthusiasm. For readers interested in deeper analysis and more InvestingPro Tips, such as the stock's overbought status according to the RSI or its high Price/Book multiple, visit https://www.investing.com/pro/TNDM. There are currently 13 additional tips available on InvestingPro, and readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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