Tandem Earnings: Softness in the Last Quarter Has Now Become More Pressing

Coming off the heels of a weak second quarter, Tandem's third quarter was more of the same. Though we made slight adjustments to our near-term expectations, this wasn’t enough to affect our $32 fair value estimate. While Tandem has recently made progress in containing operating expenses, the firm still has some years to go before returning to profitability. Similarly, projected returns on invested capital are likely to trail the weighted cost of capital through 2027, which keeps us from awarding Tandem any sort of economic moat at this point.