As we approach the annual ADA conference one has to wonder if history is getting ready to repeat itself. Looking at how Tandem (NASDAQ: TNDM) continues to power ahead many have asked is it possible for the company to meet ever increasing expectations. There is no question Tandem has the big MO on their side as analysts are now falling all over themselves to jump on the Tandem bandwagon. It seems that everyone has forgotten that this company was once on the brink of collapse.
While we aren’t sure what the future holds for the company we must admit we too are beginning to wonder whether they can come close to meeting expectations. As we have noted in past posts the company now on secure financial footing does have some positives going for them. Yet as we also have noted this by no means guarantees they are secure forever nor have the dynamics of the insulin pump market all of a sudden turned in their favor.
Being a student of history, we went back in the wave back machine to find another company that was once hot, went cold, nearly collapsed, came back from the dead and eventually won the day. And it didn’t take long to find one as MannKind (NASDAQ: MNKD) fits the bill almost perfectly with the notable exception that so far anyway they have not won the day.
When MannKind went public back in 2004 it was one of the hottest stocks going. Although Exubera turned into a disastrous failure all the analysts felt the company had built a better mouse trap. Two years after going public shares were up almost 90%. Fast forward to March 2009 the tables turned and it looked as if the company would not survive. Shares then recovered until early 2011 only to collapse again until June of 2014. From there until today it’s been pretty much all downhill.
The Tandem chart hasn’t yet turned into the roller coaster ride but is has all the earmarks. Tandem went public in late 2013 and after a brief upswing it’s basically been all downhill. The question is with the stock surging recently is the surge sustainable or is this setting up for another fall? Our gut tells us that as so often happens the stock is getting ahead of itself. This really has nothing to do with what the company is doing rather what everyone THINKS they will do.
Since hockey and basketball seasons are now over let’s talk baseball for a moment. After a 108-year draught the Chicago Cubs finally won a World Series title in 2016. This team once known for day baseball and losing was now expected to win and win big. Getting to the playoffs was no longer good enough fans expected another title. While the team is near first place today you’d think the world was coming to end if you talked to loyal Cub fans. This ultra-talented team no longer carries the burden of winning a World Series they now carry a much heavier burden of being expected to win a World Series.
This is the situation Tandem finds themselves in as everyone expects them to succeed. They expect them to move from third place into first leapfrogging Insulet (NASDAQ: PODD) and overtaking market leader Medtronic (NYSE: MDT). And sit down for this one but we actually feel sorry for the Tandem management team as even if they do everything right we’re not sure they can come close to meeting these lofty expectations.
Going back to our Cubs analogue for a moment, Cub fans endured several years of very bad baseball as the team basically tanked while the stockpiled high draft picks. Players who thankfully panned out bringing the championship this city desperately wanted. Today those days of just awful baseball are a distant memory.
Can Tandem turn into a champion? Will their pipeline of new products become All-Stars? Can they reach the World Series and dethrone the current champs? Only time will tell yet we can’t help but feel given the complex dynamics of the insulin pump market combined with the current strong position of Medtronic this won’t happen quickly if at all.
Truth be told Tandem is more like the White Sox the other team in Chicago, who like the Cubs before them are now in full blown tank mode. Like their north side neighbors, the Sox have stockpiled high draft picks who look good but have yet to produce anything. The team seems to have promise but no one knows for certain they will return to the World Series and win it again as they did in 2005. Sox fans like the Cubs fans a few years ago talk about the promise of tomorrow. They talk about all the great young players the team has and how the team is oh so close to becoming a consistent winner.
The way analysts talk about Tandem its as if the future is today. That they have what they need to win and win now. Being a long time White Sox fan, we hope this is correct. We do not want Tandem to fail, never have. However just as the Sox have proved nothing yet expect they are very good at losing, Tandem has yet to prove they can compete and win.
Let’s hope for all concerned that for once the analysts are right. That Tandem will not suffer another collapse, that the days of losing are over. And let’s hope, more like dream of a Cubs Sox World Series in the very near future. That my friends would be a dream come true.