Why diabetes care tandem stock took a hit on Tuesday

An analyst issued the equivalent of a warning on Tandem diabetes care (TNDM -3.16%) stock on its second trading day of the week, and in the absence of any other news for the company, some investors have given up on it. That left Tandem shares down more than 3% on the day, compared unfavorably with a sub-1% drop at the bell. S&P 500 index.

Citi advises to watch the stock

The prognosticator behind that bad news was City GroupJoanne Wuensch, who issued one of her bank’s 90-day catalyst watches on Tandem shares before the market opened.

Wuensch wrote in the latest research note about the specialty medical device maker that a survey of its specialty, diabetes, indicated steady growth in the number of new U.S. patients beginning in the just-completed third quarter. However, she added that management’s guidance for the quarter implied an increase in the share of new patients of about 350 basis points. “At the very least, this may be harder to achieve, making a significant earnings beat more difficult to achieve,” she said.

That said, the analyst pointed out, in each of the past three quarters, Tandem has beaten consensus forecaster estimates for profitability.

Potentially across the pond

Despite placing Tandem on that watch, Wuensch reiterated his buy recommendation and $57 per share price target. This figure anticipates a nearly 39% upside to the company’s most recent closing stock price.

One development that should pay off sooner rather than later is the recent approval by the European Union (EU) health regulator for the company’s t:slim X2 pump, which is to be used in the 27-country bloc for to deliver Eli LillyLyumjev’s ultra-rapid-acting insulin.