Earnings Release: Here's Why Analysts Cut Their Tandem Diabetes Care, Inc. (NASDAQ:TNDM) Price Target To US$35.52

Shareholders of Tandem Diabetes Care, Inc. (NASDAQ:TNDM) will be pleased this week, given that the stock price is up 19% to US$21.48 following its latest first-quarter results. The results don't look great, especially considering that statutory losses grew 220% toUS$1.97 per share. Revenues of US$234m did beat expectations by 6.5%, but it looks like a bit of a cold comfort. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the most recent consensus for Tandem Diabetes Care from 22 analysts is for revenues of US$1.00b in 2025. If met, it would imply a reasonable 2.0% increase on its revenue over the past 12 months. Losses are expected to be contained, narrowing 20% from last year to US$2.21. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$998.7m and losses of US$1.20 per share in 2025. While this year's revenue estimates held steady, there was also a regrettable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

Check out our latest analysis for Tandem Diabetes Care

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 7.1% to US$35.52, with the analysts signalling that growing losses would be a definite concern. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Tandem Diabetes Care, with the most bullish analyst valuing it at US$75.00 and the most bearish at US$18.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Tandem Diabetes Care's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.7% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that Tandem Diabetes Care is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Tandem Diabetes Care's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Tandem Diabetes Care. Long-term earnings power is much more important than next year's profits. We have forecasts for Tandem Diabetes Care going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Tandem Diabetes Care that you need to take into consideration.

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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.