Dexcom (DXCM) stock is down over 40% in Friday's session after the continuous glucose monitoring technology company fell short of revenue estimates for its second quarter and slashed its full-year revenue forecast.
In the three months ended June 30, Dexcom's revenue increased 15.3% year-over-year to $1 billion, due mostly to 18.7% growth in the U.S. market to $731.9 million. Its earnings per share (EPS) increased 26.5% from the year-ago period to 43 cents.
"While Dexcom advanced several key strategic initiatives in the second quarter, our execution did not meet our high standards," said Dexcom CEO Kevin Sayer in a statement. "We have a unique opportunity to serve millions of more customers around the world with our differentiated product portfolio and we are taking action to improve our execution and best position ourselves for continued long-term growth."
The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $1.04 billion and earnings of 39 cents per share, according to CNBC.
The sentiment worsened when Dexcom lowered its full-year revenue forecast. The company now anticipates revenue in the range of $4 billion to $4.05 billion in fiscal 2024, down from its previous forecast of $4.2 billion to $4.35 billion.
For the third quarter, Dexcom expects revenue in the range of $975 million to $1 billion, which it said accounts for "certain unique items impacting 2024 seasonality," including a reorganization of its sales team and lower revenue per user.
Analysts were anticipating revenue of $1.15 billion for the third quarter and $4.3 billion for the full year, according to Yahoo Finance.
Is Dexcom stock a buy, sell or hold?
Wall Street is bullish on the healthcare stock. According to S&P Global Market Intelligence, the average analyst target price for DXCM stock is $102.88, representing implied upside of more than 60% to current levels. Additionally, the consensus recommendation is a Buy.
However, analysts may very well revise their targets lower and reduce their ratings in the days and weeks ahead following the earnings results.
Financial services firm Jefferies is one that already adjusted its price target on Dexcom, lowering it to $100 from $160 while maintaining its Buy rating.
"DXCM cited execution issues in Q2 and expects issues around sales force disruption, channel mix, and rebates to persist through the year and recovery in 2025," said Jefferies analyst Matthew Taylor. "We do not see the DXCM issues as related to market demand or competition, believing they are mostly execution based and 'fixable' over time."
