Dexcom stock popped and broke out Monday after the diabetes devices maker whipped Wall Street's fourth-quarter expectations and announced a new continuous glucose monitor due this summer.
Dexcom's devices brought in $1.03 billion in sales, preliminarily, the company said in a news release. That trumped analysts' forecast for $1.01 billion, according to FactSet. Sales grew more than 26% year over year. For the year, sales came in at $3.6 billion, up 24%, William Blair analyst Margaret Kaczor Andrew said in a report.
Dexcom stock surged 4.6% to close at 129.63. That put shares above a buy point at 126.37 out of a cup-with-handle base, according to MarketSmith.com.
Dexcom Stock Overcomes Recent Malaise
Dexcom makes continuous glucose monitors, or CGMs. These body-worn devices keep tabs on blood sugar in real time, are key for patients with diabetes who need to respond medically to spikes and dips in their glucose levels.
Dexcom stock hit a recent low in October as growing enthusiasm for weight-loss drugs like Novo Nordisk's Wegovy and Eli Lilly's Zepbound tamped down on shares of medical devices companies that make tools to treat or manage obesity-related diseases. But shares are making a comeback and have run up 66% from that low, as of Friday's close.
Shares have an IBD Digital Relative Strength Rating of 87, which has improved from a poor 16 just three months ago. The RS Rating pits a stock's 12-month performance against all other stocks. Dexcom stock also has a strong Composite Rating of 98, reflecting its strong technical and fundamental performance.
William Blair's Kaczor Andrew expects the good times to keep rolling for Dexcom.
Guidance Appears Conservative
This summer, Dexcom said it hopes to launch in the U.S. a new CGM called Stelo for patients with type 2 diabetes who don't use insulin. The company has already submitted its application for approval to the Food and Drug Administration.
Dexcom also issued its first guidance for 2024. The company expects sales to grow 16% to 21%. That brackets Kaczor Andrew's forecast for 19% sales growth and broader analysts' view for 20%. It's also stronger than Dexcom's usual guidance for 15% to 20% annual sales growth, she said.
Gross margin guidance, on the other hand, lagged at 63% to 64% — modestly below Dexcom stock analysts' call for 64.7%. But Kaczor Andrew believes Dexcom is being conservative.
"As typical for Dexcom, we believe guidance is a base case and likely conservative," she said. "With meaningful catalysts in 2024 — basal picking up traction, new data to come on non-insulin CGM usage and the newly announced non-insulin product launch of Stelo, which has now been submitted to the FDA for review — we believe guidance is achievable and beatable."
She kept her outperform rating on Dexcom stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
