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DexCom (DXCM) to Report Q3 Earnings: What's in the Offing?

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DexCom, Inc. (DXCM - Free Report) is expected to release third-quarter 2019 results on Nov 6, after the closing bell. In the last reported quarter, the company surpassed the Zacks Consensus Estimate by 8 cents. Further, it has an average four-quarter positive surprise of 183.3%.

Which Way Are Estimates Treading?

Currently, the Zacks Consensus Estimate for third-quarter revenues is pegged at $349.4 million, suggesting growth of 31% from the year-ago reported number. The consensus estimate for earnings is pegged at 18 cents per share, indicating an improvement of 5.9% from the year-ago reported figure.

Key Catalysts

DexCom’s third-quarter top line is likely to reflect possible increase in volumes, on the back of new patients across all channels, and rising global awareness about the company’s real-time CGM.

Moreover, the company raised 2019 revenue outlook and now anticipates total revenues in the range of $1.33-$1.38 billion (up from the previously guided range of $1.25-$1.3 billion). Consequently, a similar trend is likely to have continued in the to-be-reported quarter.

With respect to DexCom’s FDA-cleared CGM system — the DexCom G4 Platinum has been boosting the company’s top line significantly and a trend that is likely to have continued in the third quarter.

Per management, the company is well poised to achieve a long-term target on the back of the expansion of the rollout of G6 and improve access to CGM. With this growing demand in mind, the company is on track to meet its goal of doubling G6 capacity by the end of 2019. Therefore, rising demand is anticipated to have positively impacted the company’s overall performance in the to-be-reported quarter.

DexCom has a sizeable international market opportunity on the back of the demographic trends and lifestyle in countries outside the United States and Europe. This trend is likely to have resulted in higher international revenues in the third quarter.

Given the improved operational discipline, the company is likely to have experienced better operating margins in the third quarter. Moreover, the company’s full-year gross margin projection ranges between 64-65% and approaching 70% as the company exits 2019 on the back of the broad introduction of lower-cost G6 trasmitter in the second half of the year. Going by this projection, a similar trend is likely to have continued in the to-be-reported quarter.

However, increase in operating expenses and intense competition are likely to have affected the company’s overall performance in the third quarter.

DexCom, Inc. Price and EPS Surprise


What Our Quantitative Model Suggests

Per our proven model, a combination of — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the chances of an earnings beat. This is not the case here as you will see.

Earnings ESP: DexCom has an Earnings ESP of -17.91%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: DexCom carries a Zacks Rank #3.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Tandem Diabetes Care, Inc. (TNDM - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Neovasc Inc. (NVCN - Free Report) has an Earnings ESP of +16.87% and a Zacks Rank #3.

ShockWave Medical, Inc. (SWAV - Free Report) has an Earnings ESP of +3.55% and a Zacks Rank #3.

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