A month has gone by since the last earnings report for DexCom, Inc. (DXCM - Free Report) . Shares have added about 11.6% in that time frame.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
DexCom Inc. reported a loss of $0.16 per share in the second quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of $0.23. Also, the figure improved from the loss of $0.24 reported in the year-ago quarter.
Total revenue grew to $170.6 million, reflecting an increase of 24% from $137.3 million in the year-ago quarter. Also, the figure came ahead of the Zacks Consensus Estimate of $166.0 million.
DexCom generated gross margin (as a percentage of revenues) of 69%, compared with 62% for the same quarter in the prior year. Notably, gross margin rebounded year-over-year due to an improvement in warranty rate, primarily within receiver lines.
International business displayed continued year-over-year growth in the quarter, generating $30 million in revenues, up 69% on a year-over-year basis. Notably, international business represented 17% of total revenue in the second quarter. Germany contributed almost 25% of international business in the quarter.
Research and development (R&D) expenses totaled $45 million in the quarter compared with $36 million a year ago. The company’s R&D investments include the G6 pivotal study and related submissions with the FDA.
Selling, general and administrative expenses totaled $86 million in the reported quarter compared with $69 million in the prior-year quarter. The rise was primarily due to year-over-year increases in head count in field sales cum customer support organizations, and higher patient-focused marketing expenses.
As of Jun 30, DexCom had $497 million in cash, cash equivalents and short-term marketable securities versus $124 million at the end of 2016. During the quarter, the company raised $400 million in gross proceeds from its convertible notes offering and paid $75 million outstanding on its $200 million credit facility.
The company projects global revenues in the band of $710 million to $740 million, reflecting growth of approximately 25% to 30%. For the full year, DexCom anticipates gross margin at the low end of the 67% to 70% guidance.
How Have Estimates Been Moving Since Then?
Following the release and in the last month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to seven lower. While looking back an additional 30 days, we can see even more downward momentum. In the past month, the consensus estimate has shifted lower by 55.9% due to these changes.
At this time, DexCom's stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. Following the exact same course, the stock was allocated also a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.