Tandem Diabetes Earnings: Multiple Factors Slowing Down Growth Leads to Lower Outlook

Though no-moat Tandem’s second-quarter results provided slight sequential improvement, top-line growth remains under pressure from competitive forces as well as patient adoption patterns ahead of new product launches. We’ve moderately lowered our near-term assumptions based on those trends, decreasing our fair value estimate by $2 to $32 per share. Unlike many medical device firms that raised their outlook after this quarter, Tandem abruptly and dramatically lowered the bottom end of its 2023 outlook to $785 million, down from $885 million, causing shares to swoon in after-market trading. We continue to expect Tandem to reach profitability in 2027, but are not yet confident enough in the firm’s ability to carve out competitive advantages that can be maintained over the longer haul.