On Monday, Stifel, a financial services company, increased its price target for Tandem Diabetes Care (NASDAQ:TNDM) shares to $40.00, up from the previous target of $37.00. The firm maintained its Buy rating on the stock. The revision comes after a survey suggested a stronger-than-expected adoption of the company's Mobi product and potential growth in new patient prescriptions (NRx).
The survey, referred to as 'Volume 3', provided new data supporting the thesis that Tandem Diabetes Care is likely to see an increase in its NRx share. According to the survey, the NRx share for Tandem in 2023 was about 32%, which is believed to reflect the company's overall NRx share for the year.
Looking ahead to 2024, the survey anticipates that the NRx share for Tandem's X2 and Mobi products could rise to 45%, marking a year-over-year increase of 13 percentage points.
Stifel's upgrade last month was based on expectations of better-than-anticipated adoption rates for Tandem's Mobi product. The firm had previously increased its forecast for 2024 NRx growth from 0% to 2%. The latest survey findings provide additional evidence that Tandem's market share in new patient prescriptions is set to grow year-over-year in the practices surveyed.
The report noted that while it is difficult to quantify the exact magnitude of growth, any increase above zero is expected to have a positive impact on Tandem's stock price. Stifel clarified that this is not a first-quarter earnings call prediction, as full market release of the Mobi product only began in mid-February.
Consequently, visible evidence of the NRx growth thesis may not be apparent in the first-quarter results. However, the firm anticipates that management commentary will support the growth outlook. The next earnings call is scheduled for May 2, 2024.
InvestingPro Insights
As Tandem Diabetes Care (NASDAQ:TNDM) garners positive attention from Stifel with an increased price target, insights from InvestingPro provide a broader financial context. With a market capitalization of $2.05 billion, Tandem's financial health and stock performance metrics offer a mixed picture.
The company's Price / Book ratio stands at a high 6.53 as of the last twelve months ending Q4 2023, suggesting that the stock may be trading at a premium compared to its book value. Despite facing a revenue decline of 6.68% over the same period, Tandem has a strong gross profit margin of 49.17%, indicating efficient control over its cost of goods sold.
Still, analysts on InvestingPro are cautious, with seven analysts revising their earnings downwards for the upcoming period, and they do not expect the company to turn a profit this year. On a positive note, Tandem's liquid assets exceed its short-term obligations, which speaks to the company's ability to manage its immediate financial responsibilities.
Over the last six months, the stock has seen a substantial price uptick of 57.51%, reflecting investor optimism which may align with Stifel's positive outlook. It's important to note that Tandem does not pay a dividend, which may influence investment decisions for income-focused shareholders.
For investors seeking a deeper dive into Tandem's financials and future prospects, InvestingPro offers additional insights. There are more InvestingPro Tips available, providing a comprehensive analysis of Tandem's performance and potential. Interested readers can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further valuable investment information.
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