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DexCom shares hold as Stifel maintains steady target

Published 2024/08/26, 14:32
DXCM
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DexCom (NASDAQ:DXCM), a medical device company, retained a favorable outlook from Stifel with a reiterated Buy rating and a steady price target of $100.00. The endorsement comes as DexCom announced the U.S. launch of Stelo, its over-the-counter, cash-pay sensor aimed at Type 2 non-insulin-dependent diabetes patients.

The new Stelo sensor is priced at $99 for a one-time purchase of two sensors, each with a 15-day usage period, or at $89 per month for a subscription that includes two sensors. This pricing is noted to be on the lower end of the market, compared to DexCom's G-Series sensors available through pharmacy channels and Abbott's Lingo prices in the United Kingdom.

Stifel's analysis suggests that while an estimated $40 million in revenue from Stelo has been incorporated into DexCom's 2024 financial guidance, the product is expected to play a more significant role as a growth driver beyond 2026. This projection is supported by insights from a recent continuous glucose monitoring (CGM) market survey and an updated discounted cash flow (DCF) analysis for DexCom.

The U.S. launch of Stelo marks a strategic move by DexCom to expand its product offerings and provide more accessible diabetes management solutions. With the product now available for purchase, it is positioned to contribute to the company's growth trajectory in the coming years.

DexCom, a medical device company, reported a 15.3% increase in second-quarter earnings, reaching $1,004 million, which fell short of the projected $1,049 million. In response, RBC Capital cut its price target for DexCom from $145.00 to $130.00, while maintaining an Outperform rating.

DexCom revised its full-year revenue guidance to 11% to 13% organic growth, with revenue expectations between $4.00 billion and $4.05 billion.

In a strategic partnership, DexCom and Tandem Diabetes Care (NASDAQ:TNDM) announced that the t:slim X2 insulin pump software now supports both DexCom G7 and G6 Continuous Glucose Monitoring (CGM) Systems. This advancement, marking the first insulin delivery system in Canada compatible with these two CGM technologies, is expected to be available this fall.

InvestingPro Insights

DexCom's strategic launch of the Stelo sensor is complemented by encouraging financial metrics and market behavior. The company's market cap stands at a robust $29.68 billion, reflecting investor confidence. Additionally, DexCom's revenue growth is impressive, with a 23.05% increase in the last twelve months as of Q2 2024, signaling strong sales performance. The gross profit margin during this period was 62.73%, indicating efficient operations and a solid profit base.

From an InvestingPro perspective, DexCom's management has been actively engaged in share buybacks, a sign that leadership is confident in the company's valuation and future prospects. Furthermore, the company operates with a moderate level of debt, which can be a positive indicator of financial stability. It's worth noting that there are 16 more InvestingPro Tips available for DexCom, providing a deeper dive into the company's performance and outlook.

Investors may also find DexCom's recent price movements of interest. Despite a significant drop over the last three months, the company has seen a strong return over the last month. This volatility highlights the dynamic nature of the market and the potential for quick shifts in investor sentiment.

For those considering an investment in DexCom, the current P/E ratio stands at 43.42, which may suggest a higher valuation relative to near-term earnings growth. However, the PEG ratio of 0.51 indicates potential for growth when considering the company's earnings trajectory. These data points, along with other InvestingPro Tips and metrics, can offer a comprehensive view of DexCom's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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