Tandem Diabetes Care Coverage Initiated by RBC Capital

RBC Capital has initiated coverage of Tandem Diabetes Care (NASDAQ:TNDM) with an Outperform rating, emphasizing the stock’s appealing risk-reward profile.

According to RBC, who set a $65 price target on the stock, Tandem shows significant upside potential driven by key growth catalysts:

• Increased adoption of the Mobi insulin pump.
• Integration with continuous glucose monitors (CGMs).
• Expansion into the Type 2 diabetes market.

RBC believes that TNDM’s growth will be fueled by several factors, including U.S. adoption of Mobi, expected new patient additions, and a significant renewal opportunity with over 90,000 pump warranties expiring in 2024.

The integration of CGMs, particularly the Libre 3 in 2025, and the expansion into the Type 2 diabetes market—which has 2.5 million potential patients—are also expected to boost revenue.

RBC Capital argues that despite the rising popularity of GLP-1 therapies, they should not impede Tandem’s growth. They clarify that GLP-1s do not reverse beta cell loss in Type 1 diabetes, and while they can slow the progression of Type 2 diabetes, insulin pumps remain essential for glycemic control.

RBC suggests that the popularity of GLP-1s could actually aid in earlier Type 2 diagnoses and stimulate insulin interventions, further expanding the market.

With Tandem trading at a discount compared to historical averages, RBC sees potential for multiple expansions. They estimate a potential upside of 58%, citing TNDM’s earnings growth and rising profitability as key indicators of an attractive investment opportunity.