/Dexcom%20Inc%20logo%20on%20sign-by%20Michael%20Vi%20via%20Shutterstock.jpg)
San Diego, California-based DexCom, Inc. (DXCM) is a medical device company that focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems. Valued at a market cap of almost $32.8 billion, the company provides its systems for use by people with diabetes, as well as for use by healthcare providers.
This healthcare company’s shares have massively underperformed the broader market over the past 52 weeks. DexCom has declined 28.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 23.5%. Nonetheless, the stock is up 8.1% on a YTD basis, compared to SPX’s 4% rise during the same time frame.
Zooming in further, DexCom has lagged behind the Health Care Select Sector SPDR Fund’s (XLV) 2.5% return over the past 52 weeks but has outpaced XLV’s 6.4% gain on a YTD basis.
DexCom's underperformance over the past year has been largely driven by its disappointing quarterly performances, which were impacted by a sharp rise in the number of patients receiving rebates. In fact, following its Q2 earnings release on Jul. 25, DXCM shares crashed by a whopping 40.7%.
Most recently, on Feb. 13, DXCM released its Q4 earnings results and delivered a mixed performance. Revenue reached $1.1 billion, marking a 7.6% year-over-year increase, driven primarily by a notable 17% growth in international sales. The top line also marginally exceeded the Wall Street estimates.
However, adjusted earnings fell 10% year-over-year to $0.45 per share, missing the consensus estimate of $0.50. The decline was primarily due to operational and cost challenges faced by the company, which led to a fall in both gross and operating margins. Despite these challenges, DexCom's management reaffirmed its fiscal year 2025 forecast, anticipating revenue growth of 14% with a non-GAAP operating margin goal of around 21%.
For the current fiscal year, ending in December, analysts expect DexCom's EPS to grow 21.3% year over year to $1.99. The company’s earnings surprise history is mixed. It surpassed the Wall Street estimates in three of the last four quarters while missing on another occasion.
Among the 22 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 18 “Strong Buy,” one “Moderate Buy,” and three “Hold” ratings.
This configuration is modestly more bullish than three months ago, with 16 analysts suggesting a “Strong Buy” rating.
On Feb. 3, Redburn-Atlantic analyst Issie Kirby upgraded DexCom’s rating to “Buy” and raised its price target to $115, which indicates a 36.7% potential upside from the current levels.
The mean price target of $99.27 represents an 18.1% upside from DXCM’s current price levels, while the Street-high price target of $125 suggests an upside potential of 48.7%.
