Why Tandem Diabetes Stock Just Jumped 22%

Tandem Diabetes Care (TNDM 22.32%) stock exploded higher after reporting a sales beat Thursday evening. Analysts forecast the maker of t:slim X2 insulin pumps would lose $0.76 per share on sales of $174 million in 2024’s first quarter. Tandem did lose money but only $0.65 per share — and beat soundly on sales, with revenue of $192.8 million.

Tandem stock opened sharply higher Friday, and as of 3:15 p.m. ET, the stock is up 22%.

Tandem Diabetes Q1 earnings

Tandem grew Q1 sales 13% year over year on a 9% increase in units shipped. Curiously, Tandem showed its greatest growth — 67% — in units sold outside the U.S., while U.S. shipments declined 12%. That translated into only a 1% decline in U.S. revenue, however, while ex-U.S. sales surged 63%.

That’s the good news. The bad news is that despite the growth, Tandem failed to earn a profit. On the other hand, thanks to stronger sales, Tandem cut the size of its loss significantly. The $0.65 in Q1 2024 losses were just one-third the size of the $1.92 per share Tandem lost in the year-ago quarter.

Is Tandem Diabetes stock a buy?

And what about next quarter? Well, that news isn’t quite as good. It seems that the blockbuster growth Tandem enjoyed in Q1 is just about played out, and management expects Q2 sales will grow less than 5% year over year, to about $205 million.

Still, for the year as a whole, Tandem looks on track to report strong results. Management says 2024 sales should be about $868 million — 16% year-over-year growth — and gross margins will be a bit higher than what was seen in Q1: 51%. That’s a non-GAAP number, granted, but it still implies that earnings might grow a bit faster than sales this year.

They almost certainly won’t grow fast enough to turn Tandem profitable. (Analysts don’t expect that to happen before 2027). But it’s a start, and for investors deciding to buy Tandem stock today, it appears to be good enough.