Stifel downgrades Tandem Diabetes to hold

Stifel downgraded Tandem Diabetes (NASDAQ:TNDM) to “hold” from “buy” and slashed its price target to $3.50 from $15 after a more disappointing than expected third quarter earnings performance and now sharply lower implied fourth guidance. The stock closed at $5.35 on Tuesday.

“Multiple factors driving increased near-term uncertainty are making Tandem highly difficult to model,” writes analyst Rick Wise, “The most significant and most incremental headwind is the much larger than anticipated negative impact the MDT 630/670G product launch/approval is having on the market.”

The prospect of these new competitive offerings – in particular the 670G (spring 2017 launch) – are causing diabetic patients to hold off committing to any new pump system and other diabetes technologies until they are able to more fully assess these MDT offerings, he added.

“For the next two-to-four quarters, until we can gain greater clarity as to the duration and magnitude of this process, it is virtually impossible for us to accurately model with a high level of confidence Tandem’s near-term revenue outlook,” Mr. Wise said.

“Despite our continued belief that Tandem has best-in-class pump technologies, integrated with the best-in-class DXCM CGM sensor, market headwinds will take time to sort out,” he added. “Until Tandem catches up with is own low-glucose suspend offering, Tandem will be at a competitive disadvantage.”