We recently compiled a list of the 7 Best Diabetes Stocks To Buy Now. In this article, we are going to take a look at where Tandem Diabetes Care, Inc. (NASDAQ:TNDM) stands against the other diabetes stocks.
According to the WHO, approximately 422 million individuals globally suffer from diabetes, with the majority residing in countries with low or middle incomes. Diabetes is directly responsible for an average of 1.5 million fatalities annually. Over the past few decades, there has been a steady rise in both the number of cases and the prevalence of diabetes. On the other hand, the International Diabetes Federation estimates that there are about 500 million diabetics worldwide, and that figure is projected to grow by 25% by 2030 and by 51% by 2045.
To help manage diabetes, both type 1 and type 2, one particular kind of medical device used is the continuous glucose monitor (CGM). The market has grown dramatically in recent years, and it has become a rapidly expanding section of diabetes care devices. The market for advanced diabetes care products — insulin pumps, pens, and continuous glucose monitoring (CGM) equipment, was estimated to be worth $21.8 billion in 2023 per GlobalData. Forecasts from GlobalData indicate that the market will reach revenues of $33.4 billion by 2030, rising at a CAGR of 6.34% over the forecast period.
As per the GlobalData marketed products database, the CGM category presently has 97 products. The vast majority of these devices are traditional CGMs, with only a few implantable sensors. According to the GlobalData pipeline products database, 133 products are either under development or approved. The figures show that this market segment is expanding quickly and is a hub for innovative new technology like implantable CGMs.
Today, CGM technology is also integrating AI. For example, Roche recently introduced new predictive AI-powered CGM technology (Accu-Chek SmartGuide). During the unveiling, Chief Medical Officer Julien Boisdron of Roche Diabetes Care referred to it as “a solution more than a CGM.” He described how the solution, which consists of two programs and a sensor, aids in both data visualization and prediction.
A new era of possibility has dawned in diabetes management and its associated complications. These novel techniques present significant opportunities for treating the combined problems associated with diabetes and obesity. A class of drugs called glucagon-like peptide-1 (GLP-1) agonists is used to treat obesity and type 2 diabetic mellitus (T2DM). As mentioned in our article, “10 Best GLP-1 and Weight Loss Stocks to Buy Now,” by 2030, the GLP-1 market, driven equally by obesity and diabetes, is expected to reach $100 billion. Thirty million GLP-1 users, or around 9% of the US population, may be on the medication by 2030.
The latest KFF Health Tracking survey indicates that 12% of American adults claim to have used a GLP-1 medicine at some point. Over the last half-decade, patients with diabetes now account for 43% of GLP-1 prescription users, while 22% of patients with obesity or overweight diagnoses also take the treatment. Adults who have heard “a little” or “a lot” about these drugs have gone from 70% to 82% over the past year, while those who have heard “a lot” or “a lot” about them have increased from 19% to 32%.
However, there are now difficulties as a result of the increased demand for these diabetes and weight reduction medications. A potential “explosion in the unlicensed sale of medication online” was indicated by the National Pharmacy Association (NPA). Semaglutides under the brand name Ozempic help individuals with type 2 diabetes control their blood sugar levels, but in some countries, such as the US under the brand name Wegovy, they are also widely used to help patients lose weight.
NPA chairman Nick Kaye stated:
“Pharmacists remain deeply concerned that the current medicine shortages crisis could lead to an explosion in the unlicensed sale of medication online.”
Methodology:
We sifted through holdings of ETFs exposed to the diabetes care industry and financial media to form an initial list of 20 diabetes stocks. Then we selected the 7 stocks that had the highest upside potential and market caps above $2 billion. The stocks are ranked in ascending order of the upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A hospital room with a patient using a medical device to administer insulin.
Tandem Diabetes Care, Inc. (NASDAQ:TNDM)
Analysts’ Upside Potential: 26.80%
The global insulin delivery and diabetes technology provider is Tandem Diabetes Care, Inc. (NASDAQ:TNDM). It has Tandem Mobi and t X2 insulin delivery systems. These pumps are software-updatable via personal computers, have variable infusion set options, and use management-IQ technology for better glycemic management. Tandem’s pumps are compatible with several CGM sensors, offering a complete AID solution for the management of insulin-dependent diabetes.
According to Tandem, the t: slim system now interfaces with three different brands of sensors, a first for the industry. The Mobi system now has better wearability and can function without a smartphone controller. Tandem offers a variety of add-on services and solutions, including decision support, reordering, reporting, and platform connection.
Tandem claims to have over 450k clients across 25 countries in a recent business presentation. This is referred to as a “scaling renewal opportunity” and is based on verified customer satisfaction. More customers equals more renewal opportunities, which adds to the new customers drawn each quarter, creating a “virtuous circle” situation.
Following the release of its impressive second-quarter results and an increase in its full-year sales expectations, Tandem Diabetes Care, Inc. (NASDAQ:TNDM) witnessed a significant 24% spike in its share price.
Analysts had predicted a loss of $0.54 per share for the company’s second quarter of 2024, but the actual loss was $0.47 per share. The quarter’s revenue of $221.9 million is above the consensus estimate of $205.63 million, indicating 13% year-over-year growth. Strong demand for Tandem’s most recent insulin delivery technology, the Tandem Mobi in particular, which has dramatically increased its market share, was the main driver of the company’s excellent financial performance.
While overseas pump shipments decreased 6% to around 10,000 units, Tandem supplied over 20,000 insulin pumps in the U.S. in Q2 2024, a 33% sequential increase from Q1 2024.
Tandem increased its sales estimate for the entire year 2024 to $885-892 million, above the $868.6 million analyst consensus and prior forecasts. In addition, the company expects revenue for the third quarter of $222-225 million, which is higher than the $220.4 million consensus forecast.
TNDM is one of the best diabetes stocks to buy now since it has received a “strong buy” recommendation from 12 analysts. TNDM has an average Wall Street analyst price target of $52.75, indicating an upside potential of 26.80% from the company’s current $41.60 price.
Overall TNDM ranks 3rd on our list of the best diabetes stocks to buy. While we acknowledge the potential of TNDM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TNDM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
