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DexCom (DXCM) Up 17.7% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for DexCom, Inc. (DXCM - Free Report) . Shares have added about 17.7% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is DXCM 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 drivers.

Recent Earnings

DexCom reported loss of 32 cents per share in the first quarter of 2018, in line with the Zacks Consensus Estimate. Also, the figure was narrower than the loss of 49 cents reported in the year-ago quarter.

Total revenues grew 29.6% to $184.4 million from $142.3 million in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $173 million.

Segmental Details

Sensor revenues & other revenues (72% of total revenues) grew 30% on a year-over-year basis to $131.9 million. Transmitter revenues (20%) increased 28% from the prior-year quarter’s tally to $37.7 million. Receiver revenues (8%) grew 26% year over year to $14.8 million.

Operational Details

DexCom generated gross margin (as a percentage of revenues) of 64.5%, which contracted 160 basis points (bps) year over year. Margins were under pressure due to an inventory change and shift toward OUS and Medicare.

International business displayed continued growth in the quarter, up 49% on a year-over-year basis.

Research and development (R&D) expenses totaled $44.8 million in the quarter, down 6.9% year over year.

Selling, general and administrative expenses totaled $104.8 million in the reported quarter, increasing 21.3% year over year.

Guidance

DexCom raised the full-year 2018 guidance.

The company expects 2018 revenues in the range of $850-$860 million, up from the previous range of $830-$850 million.

Gross profit margin is projected in the band of 65% to 68%.

Operating expenses, excluding investments in non-intensive programs, are expected to increase 10% from 2017.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. There have been four revisions higher for the current quarter compared to seven lower.

DexCom, Inc. Price and Consensus

 

DexCom, Inc. Price and Consensus | DexCom, Inc. Quote

VGM Scores

At this time, DXCM has an average Growth Score of C. Its Momentum is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, DXCM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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