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3 Reasons to Hold DexCom (DXCM) Stock in Your Portfolio
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DexCom, Inc. (DXCM - Free Report) is well-poised for growth in the coming quarters, backed by its strong product portfolio. A robust third-quarter 2022 performance, along with a series of favorable coverage decisions, is expected to contribute further. However, stiff competition and reimbursement risks persist.
So far this year, this Zacks Rank #3 (Hold) stock has lost 11% compared with a 25.9% decline of the industry and a 17.7% decline of the S&P 500.
This renowned medical devices company and provider of continuous glucose monitoring (CGM) systems has a market capitalization of $45.11 billion. The company projects 32.9% growth for the next five years and expects to maintain its strong performance. DexCom’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, missed the same in two and matched estimates in one, delivering a negative earnings surprise of 10.07%, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about DexCom's continued strength in its CGM products. It launched an updated sensor algorithm in five countries during the third quarter, making the latest G7 sensor technology available for international markets. The company anticipates FDA clearance for G7 sensor technology before 2022-end. The company, in August, announced the availability of the easy-to-use Dexcom ONE real-time CGM System on prescription via the NHS England, Wales, Scotland and Northern Ireland drug tariff to everyone with type 1 or type 2 diabetes using insulin.
DexCom’s prospects in alternative markets such as non-intensive diabetes management, hospital, gestational, pre-diabetes and obesity are likely to provide it a competitive edge in the MedTech space.
Positive Coverages: DexCom's products have been receiving increasing coverage over the past few months, raising our optimism. The company, in June, announced that people with type 1 and type 2 diabetes aged two years and above on multiple daily injections of insulin (three or more) or who use an insulin pump may now be eligible for public coverage of the Dexcom G6 CGM System via Prince Edward Island’s Diabetes Glucose Sensor Program.
The Ontario government started coverage for the Dexcom G6 CGM System through Ontario’s Assistive Devices Program for people with type 1 diabetes living in the province who are above the age of 2 years and meet coverage criteria in March.
Strong Q3 Results: DexCom’s solid third-quarter 2022 revenues buoy optimism. Rising volumes across all channels, along with strong new customer additions, owing to increasing global awareness of the benefits of real-time CGM, contributed to the upside. Impressive contributions from the Sensor segment and domestic and international revenue growth were key catalysts. DexCom also received CE Mark for an updated sensor algorithm, making the latest G7 sensor technology available for international markets.
Downsides
Reimbursement Risk: Reimbursement risk is somewhat high due to the efforts to control healthcare expenses. The company noted that most type 1 patients (above 65) pay 100% of their CGM costs from their own pockets. Unless payers (both government and private insurers) are provided with sufficient coverage and reimbursement, commercial success for DexCom will be limited, in our view.
Stiff Competition: The market for blood glucose monitoring devices is highly competitive, subject to rapid change and significantly affected by product introductions. DexCom’s competitors manufacture and market products for the single-point finger stick device market and collectively account for substantially all worldwide sales of self-monitored glucose testing systems, currently.
Estimate Trend
DexCom is witnessing a negative estimate revision trend for 2022. In the past 30 days, the Zacks Consensus Estimate for its earnings has declined from 80 cents to 79 cents.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $805.5 million, suggesting a 15.4% improvement from the year-ago quarter’s reported number. The same for earnings per share is 26 cents, implying 52.9% growth year over year.
The Zacks Consensus Estimate for ShockWave Medical’s earnings per share has been stable at $2.57 for 2022 and has risen from $3.42 to $3.56 for 2023 in the past 60 days. SWAV has rallied 25.2% so far this year. ShockWave Medical delivered an earnings surprise of 146.1%, on average, in the last four quarters.
Estimates for Merit Medical Systems have improved from earnings of $2.47 to $2.57 for 2022 and $2.77 to $2.82 for 2023 in the past 60 days. MMSI stock has risen 19.4% so far this year. Merit Medical Systems delivered an earnings surprise of 25.35%, on average, in the last four quarters.
HealthEquity’s earnings per share estimates have increased from $1.28 to $1.29 for fiscal 2023 and $1.76 to $1.79 for fiscal 2024 in the past 60 days. HQY has rallied 36.7% so far this year. HealthEquity’s earnings are anticipated to improve 26.3% over the next five years.
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3 Reasons to Hold DexCom (DXCM) Stock in Your Portfolio
DexCom, Inc. (DXCM - Free Report) is well-poised for growth in the coming quarters, backed by its strong product portfolio. A robust third-quarter 2022 performance, along with a series of favorable coverage decisions, is expected to contribute further. However, stiff competition and reimbursement risks persist.
So far this year, this Zacks Rank #3 (Hold) stock has lost 11% compared with a 25.9% decline of the industry and a 17.7% decline of the S&P 500.
This renowned medical devices company and provider of continuous glucose monitoring (CGM) systems has a market capitalization of $45.11 billion. The company projects 32.9% growth for the next five years and expects to maintain its strong performance. DexCom’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, missed the same in two and matched estimates in one, delivering a negative earnings surprise of 10.07%, on average.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about DexCom's continued strength in its CGM products. It launched an updated sensor algorithm in five countries during the third quarter, making the latest G7 sensor technology available for international markets. The company anticipates FDA clearance for G7 sensor technology before 2022-end. The company, in August, announced the availability of the easy-to-use Dexcom ONE real-time CGM System on prescription via the NHS England, Wales, Scotland and Northern Ireland drug tariff to everyone with type 1 or type 2 diabetes using insulin.
DexCom’s prospects in alternative markets such as non-intensive diabetes management, hospital, gestational, pre-diabetes and obesity are likely to provide it a competitive edge in the MedTech space.
Positive Coverages: DexCom's products have been receiving increasing coverage over the past few months, raising our optimism. The company, in June, announced that people with type 1 and type 2 diabetes aged two years and above on multiple daily injections of insulin (three or more) or who use an insulin pump may now be eligible for public coverage of the Dexcom G6 CGM System via Prince Edward Island’s Diabetes Glucose Sensor Program.
The Ontario government started coverage for the Dexcom G6 CGM System through Ontario’s Assistive Devices Program for people with type 1 diabetes living in the province who are above the age of 2 years and meet coverage criteria in March.
Strong Q3 Results: DexCom’s solid third-quarter 2022 revenues buoy optimism. Rising volumes across all channels, along with strong new customer additions, owing to increasing global awareness of the benefits of real-time CGM, contributed to the upside. Impressive contributions from the Sensor segment and domestic and international revenue growth were key catalysts. DexCom also received CE Mark for an updated sensor algorithm, making the latest G7 sensor technology available for international markets.
Downsides
Reimbursement Risk: Reimbursement risk is somewhat high due to the efforts to control healthcare expenses. The company noted that most type 1 patients (above 65) pay 100% of their CGM costs from their own pockets. Unless payers (both government and private insurers) are provided with sufficient coverage and reimbursement, commercial success for DexCom will be limited, in our view.
Stiff Competition: The market for blood glucose monitoring devices is highly competitive, subject to rapid change and significantly affected by product introductions. DexCom’s competitors manufacture and market products for the single-point finger stick device market and collectively account for substantially all worldwide sales of self-monitored glucose testing systems, currently.
Estimate Trend
DexCom is witnessing a negative estimate revision trend for 2022. In the past 30 days, the Zacks Consensus Estimate for its earnings has declined from 80 cents to 79 cents.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $805.5 million, suggesting a 15.4% improvement from the year-ago quarter’s reported number. The same for earnings per share is 26 cents, implying 52.9% growth year over year.
DexCom, Inc. Price
DexCom, Inc. price | DexCom, Inc. Quote
Key Picks
Some better-ranked stocks from the broader medical space are ShockWave Medical (SWAV - Free Report) , Merit Medical Systems (MMSI - Free Report) and HealthEquity (HQY - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for ShockWave Medical’s earnings per share has been stable at $2.57 for 2022 and has risen from $3.42 to $3.56 for 2023 in the past 60 days. SWAV has rallied 25.2% so far this year. ShockWave Medical delivered an earnings surprise of 146.1%, on average, in the last four quarters.
Estimates for Merit Medical Systems have improved from earnings of $2.47 to $2.57 for 2022 and $2.77 to $2.82 for 2023 in the past 60 days. MMSI stock has risen 19.4% so far this year. Merit Medical Systems delivered an earnings surprise of 25.35%, on average, in the last four quarters.
HealthEquity’s earnings per share estimates have increased from $1.28 to $1.29 for fiscal 2023 and $1.76 to $1.79 for fiscal 2024 in the past 60 days. HQY has rallied 36.7% so far this year. HealthEquity’s earnings are anticipated to improve 26.3% over the next five years.