In the presence of jumps by more than 85% higher in the month and about 30% in just the last week, value investors usually lose interest in the shares. That is what happened to Tandem diabetes care ins (Nasdaq:TNDM). TNDM is as much as 194% from the February lows. Value investors probably only consider buying the TNDM stock on a pullback. But momentum traders and speculators might want to take a ride in tandem.
Regardless of the investment, the first step is studying why the Tandem diabetes stock has been rising since February and then gaining momentum in April.
Why Tandem stock in the fire
March 1, Tandem announced 2017 delivery pump 17,061, which is similar to 2016 levels. For the quarter, however, supplies the pump soared from 4,418 in 2016 6,950 for the year. This is the highest quarter sales in the company’s history.
Expenses in the amount of $107 million for the year resulted in the loss of operating GAAP 62.9 million $ less than the loss of 78.1 million dollars a year earlier.
The enthusiasm in the campaign may take the company’s success in manufacturing pumps. Tandem has also expanded its business starting the t:slim x2, new furniture and move its production to a new site.
These investments in production signals that the company is confident in high demand for its core products will continue in this quarter and throughout the year.
In August last year, TNDM also announced the t:slim x2 integration with the United Kingdom G5 mobile Format cgm (continuous glucose monitoring). This announcement sets new standards for integration and G5 has offered this feature for existing and new customers. This is a huge step forward in the control of diabetes.
Not only does it allow patients with diabetes to continuously and instantaneously monitor their glucose levels, it allows them to stay more aware of new technologies. T:currently, thin x2 is the only insulin pump, capable of remote software updates. The announcement of the company notes that many insurance companies will only pay for a new pump every four years. Software update allow:thin x2 users to stay up to date on the latest technology without buying expensive new pumps.
Funding TNDM completed
Tandem wrapped up a successful round of funding that brought in $69 million the Company initially offered 30 million shares at $2 each — insurers finished to purchase 4.5 million additional shares at this price. Oversubscription speaks on interest of investors to the company.
The combination of high liquidity and the goal of achieving cash flow breakeven in the second half of 2019 assumes TNDM stock is undervalued.
Growth strategy TNDM
At their conference, according to Tandem will continue to grow by expanding its business in markets outside the United States in the second half of this year.
Tandem has applied for medical devices in Canada and will receive the CE mark sometime between the first and second quarters. In Canada, the Tandem will work in direct sales and clinical activities. This will keep operating costs low, but sales will depend on word of mouth recommendations, the channels health care and advertising.
In other geographic markets, the Tandem will use distributors who already have the infrastructure and resources necessary to support sales.
TNDM forecast gross margin
The combination of new manufacturing operations, global expansion and increased demand for the product gives the user confidence in the long-term forecast gross profit of 55 percent. Tandem sales forecast 132-$$2018-140 million.
A seasonal decline in the current quarter (Q1) will limit the sales growth rate in the short term. But the installed client base of 80,000, should improve the company’s chances of meeting its break-even target in 2019.
The bottom line for TNDM
Tandem has a positive momentum in your business. The only real competitor to the pump Medtronic PLC (NYSE:MDT). However, the Tandem distinguishes himself and extends his gap from Medtronic through the pace of innovation. Today, Tandem is ahead in the development of an automated program delivery of insulin.
Tandem TSLIM is getting compared to medtronic 670 online — satisfied customers. Consumers communicate the value and innovation With the T-slim. 2018 is a make or break year on a tandem, having happy customers are saying about the product will only help the company to meet the ambitious objectives of growth in 2018-19.
Chris Lau does not owns shares in any of the mentioned companies.