Why Tandem Diabetes Care Stock Soared Over 1,480% in 2018



Stock performance

Tandem Diabetes Care (TNDM) stock grew from $2.36 on December 29, 2017, to reach $37.31 at the close of market on December 28, 2018, an increase of ~1,481% this year. Its price on December 28 was ~4.13% higher than its prior day close of $35.83. On December 26, the company’s stock price closed at $36.47, which is a ~13.58% rise from its prior day close of $32.11.

Tandem Diabetes Care hit its 52-week high of $52.55 on September 13, 2018, which is 41% above its price at the close of market on December 28, 2018. The company hit its 52-week low stock price of $2.14 on February 9, 2018.

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Reason for the hike in the stock price

In fiscal 2018, Tandem Diabetes Care delivered solid growth during each quarter. In the first, second, and third quarters of 2018, the company shipped 4,444, 5,447, and 8,434 pumps, respectively, which represents ~58%, ~59%, and 118% YoY growth, respectively.

Tandem Diabetes Care’s revenues in the third quarter reached $46.3 million, reflecting ~71% YoY growth. In the first and second quarter of 2018, the company reported net revenues of $27.3 million and $34.1 million, respectively, reflecting ~44% and 60% YoY growth.

In 2018, Tandem Diabetes Care also increased its global footprint with distribution agreements in New Zealand, Australia, and Scandinavia.

Tandem Diabetes Care has put its net sales guidance for fiscal 2018 to be in the range of $160 million to $165 million, which represents ~49%–53% YoY growth. In the third quarter, the company’s operating margin improved to -34% from -49% in the same period the prior year.

Wall Street analysts estimate that peers Insulet Corp (PODD) and DexCom (DXCM) will report net revenues of $561.5 million and $976.61 million, respectively, in fiscal 2018, reflecting ~21.1% and ~35.9% YoY growth.

The revenue growth of Tandem Diabetes Care could boost the share prices of Invesco DWA NASDAQ Momentum ETF (DWAQ). Tandem Diabetes Care makes up ~3.16% of DWAQ’s total portfolio holdings.

Analysts’ recommendations

Of 11 analysts tracking Tandem Diabetes Care in December 2018, three of them recommended a “strong buy,” while five analysts recommended a “buy” rating. Three analysts recommended a “hold” rating.

On December 31, Tandem Diabetes Care had a consensus 12-month target price of $51.36, which represents a ~37.66% return on investment over the next 12 months.


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