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Here's Why Investors Should Buy DexCom (DXCM) Stock Now

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DexCom, Inc. (DXCM - Free Report)   is one of the top players in the MedTech space. It is likely to gain from a solid fourth-quarter performance and robust growth at the Sensor, Transmitter and Receiver segments.

In the past three months, this Zacks Rank #2 (Buy) stock has rallied 13.4% compared with the S&P 500’s 6.2% increase.

What’s Favoring the Stock?

DexCom exited the fourth quarter on a strong note, wherein earnings and revenues outpaced the Zacks Consensus Estimate. Revenues at the Sensor segment (75% of total revenues) surged 57% on a year-over-year basis to $252.8 million. Transmitter revenues (17%) increased 39% year over year to $59 million. Receiver revenues (8%) rallied 46% year over year to $26.3 million.

For 2019, the company expects revenues in the range of $1.18-$1.23 billion. However, gross profit margin is projected to be 65% of net revenues. While adjusted operating margin is expected to be 5.5% of net revenues, adjusted EBITDA margin is expected to be 18%.

DexCom recently announced that it has received Health Canada approval for the next generation Dexcom G6 CGM System for people with diabetes aged two years and older.

Earlier, Dexcom G6 was introduced in the United States, the United Kingdom, Ireland and several other European countries, and has witnessed solid sales. In 2019, DexCom plans the G6 commercial launch in Canada as the company continues to build capacity for supporting global launch plans.

These apart, DexCom announced an amendment to its previously-announced collaboration with Verily. The revised terms are likely to expand DexCom’s product development goals.

By the end of fourth-quarter 2018, management at DexCom announced that the company has been witnessing significant increases in adoption in both the Medicare and international markets.

Also, the company advanced its interoperability and decision support initiatives including the acquisition of TypeZero and solidified its product pipeline by amending the agreement with Verily.

Which Way Are Estimates Trending?

The Zacks Consensus Estimate for 2019 revenues is pegged at $1.23 billion, reflecting an 18.8% growth. The same for adjusted earnings is pinned at 28 cents, indicating a year-over-year decline of 6.7%.

Key Picks

Other top-ranked stocks in the MedTech space are Surmodics, Inc. (SRDX - Free Report) , Abbott Laboratories (ABT - Free Report) and Cardiovascular Systems, Inc. (CSII - Free Report) .

Surmodics has a long-term expected earnings growth rate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abbott’s long-term earnings growth rate is projected at 11.7%. The stock carries a Zacks Rank #2.

Cardiovascular Systems exceeded the Zacks Consensus Estimate in each of the trailing four quarters, the average being 77.1%. The stock sports a Zacks Rank of 1.

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