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3 Reasons to Hold DexCom (DXCM) Stock in Your Portfolio
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DexCom, Inc. (DXCM - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A robust first-quarter 2023 performance, along with a series of favorable coverage decisions, is expected to contribute further. However, risks related to stiff competition and reimbursement persist.
So far this year, this Zacks Rank #3 (Hold) stock has risen 3% compared with the industry’s 0.5% growth. The S&P 500 Index has gained 8.3% in the same time frame.
DXCM, a renowned medical-devices company and provider of continuous glucose monitoring (CGM) systems, has a market capitalization of $44.45 billion. It projects 39% growth over the next five years and expects to maintain the strong performance.
DexCom’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed once, and met the same in another, delivering an average surprise of 2.86%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about DexCom's continued strength in its CGM products. It launched an updated sensor algorithm in multiple countries in the second half of 2022, making the latest G7 sensor technology available to international markets.
The company received FDA clearance for G7 sensor technology in December 2022. These developments are likely to support DXCM’s future growth. In 2022, the company also launched the easy-to-use Dexcom ONE real-time CGM System on prescription for everyone with type 1 or type 2 diabetes using insulin. It did so via drug tariff in NHS England, Wales, Scotland and Northern Ireland.
DexCom’s prospects in alternative markets, such as non-intensive diabetes management, hospitals, gestational, pre-diabetes and obesity are likely to provide it with a competitive edge in the MedTech space.
Positive Coverages: DXCM’s products have been receiving increasing coverage over the past few months, raising our optimism. In June 2022, the company announced that type 1 and type 2 diabetic patients (aged two years and above) who are on multiple daily injections of insulin (three or more) or who use an insulin pump may now be eligible for public coverage of the Dexcom G6 CGM System via Prince Edward Island’s Diabetes Glucose Sensor Program.
DexCom ended the first quarter with new patient additions.
The Ontario government started coverage for the Dexcom G6 CGM System through Ontario’s Assistive Devices Program. This program is for provincial people with type 1 diabetes, who are above the age of two and meet the coverage criteria.
Strong Q1 Results: DexCom’s solid first-quarter 2023 revenues buoy optimism. Rising volumes across all channels, along with new customer additions due to increasing global awareness of the benefits of real-time CGM, contributed to the upside.
Impressive contributions from the Sensor segment, and domestic and international revenue growth were the key catalysts. Additionally, the glucose monitoring market presents significant commercial opportunities for the company.
Downsides
Rising Costs: DexCom's gross margin contracted 90 basis points during the first quarter to 62.4%, reflecting the rising cost of sales. The company expects adjusted gross margin of 62-63%, indicating persisting cost pressure.
Stiff Competition:The market for blood glucose monitoring devices is highly competitive, subject to rapid changes and new product introductions. DXCM’s competitors manufacture and market products for the single-point finger stick device market and collectively account for substantially all worldwide sales of self-monitored glucose testing systems at present.
Estimate Trend
DexCom is witnessing a mixed estimate revision trend for 2023 and 2024. In the past 30 days, the consensus mark for earnings per share decreased 1 cent to $1.06 for 2023 and increased 1 cent to $1.47 for 2024.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $837 million, indicating a 20.2% improvement from the year-ago quarter’s reported number. The same for earnings is pinned at 22 cents per share, implying 29.4% growth year over year.
Merit Medical Systems has an estimated long-term growth rate of 11%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20.22%.
So far this year, MMSI’s shares have risen 18.9% compared with the industry’s 8.7% growth.
West Pharmaceutical Services has an estimated long-term growth rate of 6.3%. Its earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 13.61%.
So far this year, WST’s shares have gained 49.1% compared with the industry’s 8.7% growth.
Perrigo’s earnings are expected to improve 24.2% in 2023. The strong momentum is likely to continue in 2024 as well. PRGO’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average negative surprise being 0.79%.
The company has lost 1.9% so far this year against the industry’s 4.8% growth.
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3 Reasons to Hold DexCom (DXCM) Stock in Your Portfolio
DexCom, Inc. (DXCM - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A robust first-quarter 2023 performance, along with a series of favorable coverage decisions, is expected to contribute further. However, risks related to stiff competition and reimbursement persist.
So far this year, this Zacks Rank #3 (Hold) stock has risen 3% compared with the industry’s 0.5% growth. The S&P 500 Index has gained 8.3% in the same time frame.
DXCM, a renowned medical-devices company and provider of continuous glucose monitoring (CGM) systems, has a market capitalization of $44.45 billion. It projects 39% growth over the next five years and expects to maintain the strong performance.
DexCom’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed once, and met the same in another, delivering an average surprise of 2.86%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about DexCom's continued strength in its CGM products. It launched an updated sensor algorithm in multiple countries in the second half of 2022, making the latest G7 sensor technology available to international markets.
The company received FDA clearance for G7 sensor technology in December 2022. These developments are likely to support DXCM’s future growth. In 2022, the company also launched the easy-to-use Dexcom ONE real-time CGM System on prescription for everyone with type 1 or type 2 diabetes using insulin. It did so via drug tariff in NHS England, Wales, Scotland and Northern Ireland.
DexCom’s prospects in alternative markets, such as non-intensive diabetes management, hospitals, gestational, pre-diabetes and obesity are likely to provide it with a competitive edge in the MedTech space.
Positive Coverages: DXCM’s products have been receiving increasing coverage over the past few months, raising our optimism. In June 2022, the company announced that type 1 and type 2 diabetic patients (aged two years and above) who are on multiple daily injections of insulin (three or more) or who use an insulin pump may now be eligible for public coverage of the Dexcom G6 CGM System via Prince Edward Island’s Diabetes Glucose Sensor Program.
DexCom ended the first quarter with new patient additions.
The Ontario government started coverage for the Dexcom G6 CGM System through Ontario’s Assistive Devices Program. This program is for provincial people with type 1 diabetes, who are above the age of two and meet the coverage criteria.
Strong Q1 Results: DexCom’s solid first-quarter 2023 revenues buoy optimism. Rising volumes across all channels, along with new customer additions due to increasing global awareness of the benefits of real-time CGM, contributed to the upside.
Impressive contributions from the Sensor segment, and domestic and international revenue growth were the key catalysts. Additionally, the glucose monitoring market presents significant commercial opportunities for the company.
Downsides
Rising Costs: DexCom's gross margin contracted 90 basis points during the first quarter to 62.4%, reflecting the rising cost of sales. The company expects adjusted gross margin of 62-63%, indicating persisting cost pressure.
Stiff Competition:The market for blood glucose monitoring devices is highly competitive, subject to rapid changes and new product introductions. DXCM’s competitors manufacture and market products for the single-point finger stick device market and collectively account for substantially all worldwide sales of self-monitored glucose testing systems at present.
Estimate Trend
DexCom is witnessing a mixed estimate revision trend for 2023 and 2024. In the past 30 days, the consensus mark for earnings per share decreased 1 cent to $1.06 for 2023 and increased 1 cent to $1.47 for 2024.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $837 million, indicating a 20.2% improvement from the year-ago quarter’s reported number. The same for earnings is pinned at 22 cents per share, implying 29.4% growth year over year.
DexCom, Inc. Price
DexCom, Inc. price | DexCom, Inc. Quote
Stocks to Consider
Some better-ranked stocks from the broader medical space are Merit Medical Systems (MMSI - Free Report) , West Pharmaceutical Services (WST - Free Report) and Perrigo (PRGO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical Systems has an estimated long-term growth rate of 11%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20.22%.
So far this year, MMSI’s shares have risen 18.9% compared with the industry’s 8.7% growth.
West Pharmaceutical Services has an estimated long-term growth rate of 6.3%. Its earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 13.61%.
So far this year, WST’s shares have gained 49.1% compared with the industry’s 8.7% growth.
Perrigo’s earnings are expected to improve 24.2% in 2023. The strong momentum is likely to continue in 2024 as well. PRGO’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average negative surprise being 0.79%.
The company has lost 1.9% so far this year against the industry’s 4.8% growth.