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DexCom (DXCM) Down 9.6% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for DexCom, Inc. (DXCM - Free Report) . Shares have lost about 9.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
DexCom Q1 Loss Narrower than Expected, Revenues Miss
DexCom Inc. DXCM reported a loss of $0.49 per share in the first quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of $0.55. However, the figure was wider than the loss of $0.23 reported in the year-ago quarter.
Interestingly, Dexcom posted a positive earnings surprise in the last quarter as well.
Getting back to the quarter, total revenue grew to $142 million, reflecting an increase of 22.4% from $116 million in the year-ago quarter. However, the figure lagged the Zacks Consensus Estimate of $144 million.
Operational Details
DexCom generated a gross margin (as a percentage of revenues) of 66%, compared with 65% for the same quarter in the prior year. Notably, gross margin was slightly below management’s anticipated range for the quarter, thanks to a drop in first-quarter sales.
International business showed continued year-over-year growth in the quarter, generating $26 million in revenues, up 37% on a year-over-year basis. Notably, international business represented 18% of total revenue in the first quarter. Particularly, Germany fueled almost 37% growth outside the U.S. in the quarter.
Research and development (R&D) expenses totaled $48 million in the quarter, compared with $32 million a year ago. The company’s R&D investments include the G6 pivotal study and related submissions with the FDA.
Selling, general and administrative expenses totaled $86 million in the reported quarter, compared with $62 million in the same quarter of 2016. The rise was primarily due to year-over-year increases in head count in customer support organizations, higher marketing expenses and escalating IT costs.
Financial Update
As of Mar 31, 2017, DexCom had $181.1 million in cash, cash equivalents and short-term marketable securities.
Guidance
The company projects global revenues in the band of $710 million to $740 million, reflecting growth of approximately 25% to 30%.
For the full year, DexCom anticipates gross margin at the low end of the 67% to 70% guidance.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to eight lower. While looking back an additional 30 days, we can see even more downward momentum. There have been nine moves down in the last two months. In the past month, the consensus estimate has shifted downward by 49.4% due to these changes.
Currently, DexCom's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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DexCom (DXCM) Down 9.6% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for DexCom, Inc. (DXCM - Free Report) . Shares have lost about 9.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
DexCom Q1 Loss Narrower than Expected, Revenues Miss
DexCom Inc. DXCM reported a loss of $0.49 per share in the first quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of $0.55. However, the figure was wider than the loss of $0.23 reported in the year-ago quarter.
Interestingly, Dexcom posted a positive earnings surprise in the last quarter as well.
Getting back to the quarter, total revenue grew to $142 million, reflecting an increase of 22.4% from $116 million in the year-ago quarter. However, the figure lagged the Zacks Consensus Estimate of $144 million.
Operational Details
DexCom generated a gross margin (as a percentage of revenues) of 66%, compared with 65% for the same quarter in the prior year. Notably, gross margin was slightly below management’s anticipated range for the quarter, thanks to a drop in first-quarter sales.
International business showed continued year-over-year growth in the quarter, generating $26 million in revenues, up 37% on a year-over-year basis. Notably, international business represented 18% of total revenue in the first quarter. Particularly, Germany fueled almost 37% growth outside the U.S. in the quarter.
Research and development (R&D) expenses totaled $48 million in the quarter, compared with $32 million a year ago. The company’s R&D investments include the G6 pivotal study and related submissions with the FDA.
Selling, general and administrative expenses totaled $86 million in the reported quarter, compared with $62 million in the same quarter of 2016. The rise was primarily due to year-over-year increases in head count in customer support organizations, higher marketing expenses and escalating IT costs.
Financial Update
As of Mar 31, 2017, DexCom had $181.1 million in cash, cash equivalents and short-term marketable securities.
Guidance
The company projects global revenues in the band of $710 million to $740 million, reflecting growth of approximately 25% to 30%.
For the full year, DexCom anticipates gross margin at the low end of the 67% to 70% guidance.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to eight lower. While looking back an additional 30 days, we can see even more downward momentum. There have been nine moves down in the last two months. In the past month, the consensus estimate has shifted downward by 49.4% due to these changes.
DexCom, Inc. Price and Consensus
DexCom, Inc. Price and Consensus | DexCom, Inc. Quote
VGM Scores
Currently, DexCom's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.