Insights

Why Tandem Diabetes Care Stock Is Cratering Today

What happened

Shares of global insulin delivery and diabetes technology company Tandem Diabetes Care (NASDAQ: TNDM) are under enormous pressure today. As of 11:28 a.m. ET, the diabetes care specialist’s stock was down by a hefty by 16.66%.

What’s sparking this sell-off? After Wednesday’s closing bell, Tandem released its second-quarter financial results. Two issues appear to be drawing the ire of shareholders today:

Tandem missed Wall Street’s consensus estimates for both its bottom and top lines for the three-month period.
Due to weaker-than-expected sales in the U.S., the company also lowered its 2022 full-year revenue forecast to $835 million to $845 million. Previously, Tandem called for 2022 sales to come in between $850 million and $865 million.

So what

Prior to 2022, Tandem was one of the hottest stocks in all of healthcare. From 2017 to 2021, the company’s shares soared over 30-fold.

This year has been an entirely different story, however. After today’s double-digit decline, the stock is now down by about 61% for the year. 

Now what

What’s behind Tandem’s downward spiral in 2022? Although the company’s core diabetes franchise is still growing by leaps and bounds, its shares were trading at over nine times forward-looking sales to start the year. This moody market has taken a sledgehammer to nearly all healthcare stocks with sizable premiums this year. The good news is that Tandem’s stock now costs well under four times 2024 projected sales, potentially making it a bargain for investors willing to hold during this turbulent period.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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