Wells Fargo downgraded Tandem Diabetes Care (Nasdaq:TNDM) as competitors apply pressure to the automated insulin delivery technology developer.
According to SeekingAlpha, analysts led by Larry Biegelsen moved Tandem from “Overweight” to “Underweight” due to bullish expectations on Wall Street as the company’s competition, including Insulet and Medtronic, come to the fore. The street responded in kind, with shares of TNDM down 6.8% at $56 per share in early-morning trading today.
The report said that Biegelsen wrote that there is “downside risk” to estimates on Wall Street from new competition in Tandem’s area’s of growth.
Insulet and its next-generation Omnipod 5 are said to be applying pressure to Tandem’s new patient starts and renewals, while positive feedback on Medtronic’s next-generation MiniMed 780G insulin pump provides another competitive challenge, particularly in terms of growth outside the U.S., analysts say.
BTIG analyst Marie Thibault wrote in a report following June’s American Diabetes Association (ADA) Scientific Sessions that a catalyst for the company is conversion from multiple daily injections, which, as suggested by the latest reports, may be threatened by the rise of the competitors in the space.
The analysts do not currently have a “Buy,” “Neutral,” or “Sell” rating for the company.
“We discussed various growth drivers that are expected to propel the company’s installed base from 350,000 users today to its goal of 1 million users by 2027,” Thibault wrote. “These catalysts include the extensive pipeline, diabetes technology and data converging to accelerate conversion from multiple daily injections (MDI), the ongoing renewal tailwind that should mirror historical growth, competitive wins, and expansion outside the U.S. Improving retention should also help drive toward this goal.”
At the ADA sessions, Tandem presented positive data on its t:slim X2 insulin pump with Control-IQ technology, then followed it up last month with the acquisition of infusion set maker Capillary Biomedical.
However, the company’s second-quarter earnings, released last week, represented misses on Wall Street projections and a reduced sales guidance, only compounding the current view on the company’s outlook expressed by Wells Fargo.