Tandem Diabetes (TNDM) Draws a Price Target Lift from Oppenheimer on International Launch Potential

Oppenheimer's Steven Lichtman now bets on 6% in return potential for TNDM stock, with eyes on a new driver: a forthcoming international launch.


Tandem Diabetes Care Inc (NASDAQ:TNDM) has Oppenheimer analyst Steven Lichtman with eyes on the biotech firm’s next new driver at play: an international launch he anticipates to kickstart in the back half of this year. The analyst sees fit to hike up his long-term expectations that were already surpassing the Street, as he spotlights a “significant international market opportunity.”

Therefore, the analyst reiterates an Outperform rating on TNDM stock while boosting the price target from $10 to $15, which implies a 6% upside from current levels. (To watch Lichtman’s track record, click here)

“Our focus year-to-date on TNDM has been around near-term drivers in the US, including the benefits from JNJ’s exit from the insulin pump market, a building new replacement cycle and a product pipeline expected to begin contributing in 2H18. […] More mature public diabetes companies have OUS revenue mix of about 30%. Our estimates build in a more conservative 20% long-term mix at this point. We believe TNDM is well positioned to ramp internationally as the distributors it has announced agreements with are former JNJ Animas distributors with solid experience,” highlights Lichtman.

Keep in mind, this is a company making key international moves, having issues a slew of reveals in 2018 regarding its expansion plans outside the U.S. TNDM inked alliance distribution deals in Scandinavia in February, Italy in April, and Australia as well as New Zealand likewise last month. Additionally, the company garnered a CE Mark green light, leading TNDM to file for approval in Canada. Moving forward, the company intends to launch the X2 in select international markets, including Canada in the back half of this year.

When eyeing the monster international prospects facing TNDM, the analyst points out the following: roughly 3.4 million people in Canada live with diabetes; over 32 million people in Europe have diabetes; and from Australia to New Zealand, around 2 million people are diagnosed with diabetes. For context, 5% to 10% of all diabetes cases in the U.S. point to Type 1, the standout focus for TNDM.

Lichtman notes, “At a more mature stage, publicly traded diabetes companies (DXCM, MDT, PODD) generate on average ~30% of their diabetes product sales from OUS markets. We build in a more conservative 20% long-term mix into our TNDM estimates, though we’ll certainly revisit this as TNDM expands its international plans. Distributors signed to date are former JNJ Animas distributors.”

Additional drivers to look out for this year point to the advantages for TNDM of Johnson & Johnson’s diabetes device exit, a fresh replacement cycle, as well as a Basal IQ launch come this summer. Moreover, on the heels of Dexcom’s G6 green light as an integrated CGM (iCGM), Tandem has been in conversations with the FD regarding bringing on board iCGM compatibility “shortly” following Basal IQ G5 approval. This would notably give a window to TNDM for its Basal IQ to be utilized with the G6.

For 2018, the analyst maintains his sales expectations at $138 million, marking 35% in year-over-year growth. However, the analyst’s above-consensus sales projections for 2019 soar from $179 million to $182 million, or 32% in year-over-year growth; and from $217 million to $227 million, suggesting 25% year-over-year growth. Likewise, the analyst factors in beyond $90 million in international sales for his long-term model, calling his initial OUS expectations “conservative.”

TipRanks indicates a strong bullish camp betting on the biotech player. Consider that 4 out of 5 analysts polled in the last 3 months rate a Buy on TNDM stock with just 1 maintaining a Hold.

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