Recent share performance and business snapshot

Tandem Diabetes Care (TNDM) has been under pressure recently, with the stock showing a 4.3% decline over the past day, 7.1% over the past week, and 10.1% over the past month, while gaining 36.3% over the past 3 months.

The company reported revenue of US$1,007.001m and a net loss of US$203.366m, with annual revenue growth of 8.3% and annual net income growth that is very large. Its value score of 4 may interest investors who are comparing diabetes care device makers.

At a share price of US$20.16, Tandem’s recent 90-day share price return of 36.3% contrasts with a year-to-date share price decline of 6.5% and a 1-year total shareholder return decline of 42.7%. This suggests that recent momentum has picked up after a much weaker longer-term experience for shareholders.

If you are looking beyond a single diabetes device maker, this could be a good moment to scan other healthcare names using healthcare stocks and see how they compare on growth, profitability, and risk.

With the shares still below analyst targets and trading at an intrinsic discount, yet recovering sharply over 3 months after steep multi year declines, is this a reset that offers a buying opportunity, or is future growth already priced in?

Most Popular Narrative: 21.6% Undervalued

The most followed narrative pegs Tandem Diabetes Care’s fair value at about US$25.71 a share, compared with the recent close at US$20.16, framing the current price as a discount that hinges on specific growth and profitability assumptions.

Advancements in product pipeline including the upcoming launches of Steadiset extended wear infusion sets and Tubeless Mobi reinforce innovation leadership and enable participation in the sustained shift toward automated, user-friendly pump solutions, which will support both topline growth and gross margin expansion. Enhanced connectivity and interoperability, demonstrated by t:slim's integration with the widely-used Libre 3 CGM, are poised to attract non-pump CGM users and reinforce ecosystem lock-in, expanding the user base and boosting high-margin recurring supply revenues.

Curious how recurring supplies, margin uplift, and a premium future P/E all fit together in this story? The full narrative lays out the math behind that fair value call.

The narrative uses a discount rate of roughly 8.39%, along with explicit assumptions for revenue growth, future earnings and profit margins, to arrive at its US$25.71 estimate. It leans on expectations that earnings turn positive over the next few years and that the market is willing to pay a high multiple on those future profits, while also factoring in share count growth and the time value of money.

Result: Fair Value of $25.71 (UNDERVALUED)

However, this hinges on Tandem defending pump share and executing its pharmacy and international expansion, where tougher competition and operational hiccups could unsettle those fair value assumptions.

Build Your Own Tandem Diabetes Care Narrative

If you look at these numbers and reach a different conclusion, or simply prefer to test your own assumptions, you can build a complete narrative in just a few minutes with Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Tandem Diabetes Care.

Looking for more investment ideas?

If Tandem has caught your attention, do not stop here. Use this momentum to line up your next few ideas before the market moves on.

• Spot potential value candidates early by scanning these 863 undervalued stocks based on cash flows that may be trading at a discount to their underlying cash flow potential.
• Tap into the growing demand for artificial intelligence by checking out these 24 AI penny stocks that focus on real business use cases rather than hype alone.
• Boost your income watchlist with these 12 dividend stocks with yields > 3% that offer yields above 3% while still backed by business fundamentals.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.