The diabetes battle between Abbott Laboratories and Dexcom is poised to heat up as the rivals look to enter the metabolic health space. And the competition could bolster Dexcom stock and shares of its rival medical devices maker.
Shares of both companies have pulled back over recent months. Dexcom stock plummeted 41% in a single day on July 26 after the company cut its outlook for the year.
Still, analysts have high expectations for Dexcom as the company looks to expand its reach. Dexcom and Abbott are both preparing to launch their newest continuous glucose monitors, or CGMs. These body-worn devices help people keep tabs on their blood sugar in real time.
CGMs are a mainstay in diabetes treatment, but experts say they could soon benefit non-diabetics who are interested in improving their metabolic health. Dexcom's new Stelo as well as Libre Rio and Lingo, from Abbott, will be available over-the-counter, meaning people won't need a prescription to buy them.
GlobalData analyst Thomas Fleming expects the market for continuous glucose monitors to grow by a 3.6% compounded annual rate from 2023 to 2033.
"CGMs, which provide real-time monitoring of blood glucose levels, are expected to see substantial growth in the next decade," he said in a report. "CGMs are transformative not only for individuals with diabetes but also for those seeking to monitor their glucose levels for overall health and wellness."
Dexcom Stock: Becoming A Top 3 Player
Dexcom has emerged as a key player in this market. But shares plunged after the company slashed its sales guidance for 2024 by $200 million to $300 million. Chief Executive Kevin Sayer acknowledged in a statement that the second-quarter metrics didn't "meet our high standards."
But when Sayer took the reins at Dexcom in 2015, he hoped to become "one of the three."
"There are usually three winners in a medical device industry," he told Investor's Business Daily. "We've been the ones who created the rules in the industry."
Those rules are changing. Dexcom will launch its Stelo device this month for people with type 2 diabetes who don't use insulin. Abbott is also launching its Libre Rio for the same population of patients and its Lingo device for non-diabetics.
Sayer acknowledges the looming competition. But Dexcom is ready as it focuses on the launch. Though Dexcom hasn't laid out its pricing plans, Sayer expects a rush of orders.
"We'll be competing with them," he said. "We have for years."
Rivaling Big Names Abbott, Medtronic
Dexcom has maintained a conservative view for Stelo to account for 1% of 2024 sales.
Abbott expects its continuous glucose monitor franchise, dubbed Libre, to generate $10 billion in sales each year by 2028. The business includes Abbott's flagship product, FreeStyle Libre.
William Blair analyst Margaret Kaczor Andrew says Dexcom is facing off with bigger rivals who "remain heavily invested in the space and can impact Dexcom's growth by taking share of existing or new patients in the CGM market."
But forecasts still show Dexcom on a bullish trajectory. Analysts who follow Dexcom stock expect sales to climb 12% to 17% over the next six years, according to FactSet. In calendar year 2029, the Street projects a whopping $8.43 billion in sales.
Abbott's diabetes care unit is expected to put up similar numbers, growing 17% this year, 15% in 2025 and 14% in 2026, before slowing to 5% growth in 2027 — the latest estimated year. That year, analysts following Abbott stock expect $9.23 billion in sales.
Over the next five years, analysts expect Medtronic's diabetes devices business to grow 6% to 9% annually, before ballooning to 19% growth in fiscal year 2030. Then, analysts project $4.17 billion in sales. Medtronic has yet to join the battle for share among non insulin-using diabetics.
Abbott Stock Is Also Under Pressure
However, Dexcom stock has deflated about 50% from its year-high at 142 on March 26. Similarly, Abbott stock topped out in 2024 at 121.64 in early March. From there, shares have skidded about 10%, according to MarketSurge.
But experts expect the continuous glucose monitoring space to gain steam, thanks to the popularity of weight-loss drugs from Novo Nordisk and Eli Lilly. It's also important to note, the CGM space is still largely untapped.
RBC Capital Markets analyst Shagun Singh estimates 2.5% of patients with diabetes use a CGM from Abbott, Dexcom or Medtronic. Andrew, the William Blair analyst, says there are 25 million people who could benefit from Stelo and Libre Rio.
There are important differences between Dexcom's old offerings and its new one. Stelo is designed for people who don't use insulin. The device features fewer alerts. The blood glucose range is smaller because they are less prone to massive dips and spikes. And it will be good for 15 days.
Dexcom will also offer it as a one-time purchase or via a subscription, Andrew said. She noted Dexcom has grown its sales force to nearly 400 representatives — similar to Abbott. This "should be a leading indicator to the level of demand the company sees on the horizon."
She has an outperform rating on Dexcom stock.
Dexcom Stock And CGM Benefits
But for Sayer, the benefit of CGM use is a no-brainer, especially for diabetics.
During the American Diabetes Association annual meeting in June, Dexcom said patients who don't use insulin, but wore one of its devices, had a four-hour increase in the time their glucose was in its targeted range.
Further, patients who used the CGM for a year had a 2.3% reduction in A1C, a measure of blood sugar levels over three months.
"This is a remarkable study and very important information for people," he said. "And over time this is the type of information we'll use to trigger reimbursement like we have for years for insulin users as well."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
