Baird Just Downgraded One of The Year's Best Stocks

TNDM stock was below $3 per share coming into 2018

by Josh Selway

Published on Sep 14, 2018 at 10:07 AM
Updated on Sep 14, 2018 at 10:42 AM

Tandem Diabetes Care Inc (NASDAQ:TNDM) has been one of the best stocks in 2018. The shares ended 2017 at $2.36, but in late February began a massive multi-month uptrend that had them yesterday trade as high as $52.55 -- an annual peak. Today, however, TNDM is down 8.3% at $46.92, following a downgrade at Baird.

The brokerage firm lowered its rating on the insulin pump specialist to "neutral" and raised its price target to $47 from $42.* The downgrade comes on valuation concerns following the stock's dramatic rise. Still, most analysts tracking TNDM remain bullish, with seven of nine handing out "buy" or "strong buy" ratings.

There are plenty of skeptics out there, however, expecting the shares to pull back further. Most notably, short interest accounts for a healthy 10% of Tandem Diabetes Care's float.

As for options activity, total open interest is now at a 52-week high on the equity, and volatility expectations are ramping up. At last check, the 30-day at-the-money implied volatility was 85%, ranking in the 71st percentile of its annual range. Meanwhile, it may not be surprising to note that the stock has regularly made bigger moves than the options market was expecting over the past year, going by its Schaeffer's Volatility Scorecard (SVS) of 100 -- the highest reading possible.

 *Editor's note: An earlier version of this article described the Baird price target change as a cut to $42 from $47. We regret the error.

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