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Will DexCom (DXCM) Loss Better Estimates this Earnings?

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We expect DexCom Inc. (DXCM - Free Report) to post a narrower-than-expected loss figure when it reports fourth quarter and full year 2014 results on Feb 25. However, in the last quarter, the company’s loss of 8 cents per share was wider than the Zacks Consensus Estimate by 3 cents.

Let’s see how things are shaping up for this announcement.

What is Driving the Better-than-Expected Earnings?

Last month, DexCom announced its preliminary fourth-quarter 2014 results. The company anticipates product revenues to surge an impressive 64% on a year-over-year basis to $84 million. DexCom is riding high on the back of a number of FDA approvals as well as a robust product pipeline.

Meanwhile, the company has received clearances from the FDA for G4 Platinum Continuous Glucose Monitoring (CGM) system and the CGM remote mobile communications device – DexCom SHARE. DexCom is also focused on introducing a steady stream of innovative products related to its sensor technology.

We believe DexCom will generate significant top-line growth on the back of strong performance by the G4 Platinum system coupled with other innovative product launches.

Why a Likely Positive Surprise?

Our proven model shows that DexCom is likely to post narrower loss because it has the right combination of two key ingredients.

Zacks ESP: DexCom’s Earnings ESP stands at +66.67%. This is because the company’s Most Accurate estimate stands at a loss of a penny, whereas the Zacks Consensus Estimate is pegged at a loss of 3 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive surprise.  

Zacks Rank: DexCom currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of DexCom’s Zacks Rank #3 and +66.67% ESP makes us reasonably confident of the company surpassing estimates this quarter.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Impax Laboratories (IPXL - Free Report) has an earnings ESP of +27.27% and a Zacks Rank #1.

ACADIA Pharmaceuticals (ACAD - Free Report) has an earnings ESP of +3.85% and a Zacks Rank #2.

Hyperion Therapeutics has an earnings ESP of +15.38% and a Zacks Rank #2.




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