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DexCom (DXCM) Scales 52-Week High: What's Driving the Stock?

Zacks Equity Research

On Aug 28, shares of DexCom, Inc. DXCM reached a 52-week high of $178.45, closing the session marginally lower at $175.19.

Over the past year, shares of DexCom have rallied 46.2% compared with the industry’s growth of 10.5%. The current level is also higher than the S&P 500 index’s rally of 13%.

The company, being a major player in developing continuous glucose monitoring (CGM) systems for diabetic people and healthcare providers, is expected to scale new highs in the near term. It has average positive earnings surprise of 183.3% for the trailing four quarters.

The estimate revision trend for the current year is impressive as well. Over the past 30 days, the Zacks Consensus Estimate for the company’s earnings has risen 17.5% to 94 cents.

Per our Style Score, DexCom has Growth Score of A, which is reflective of its solid prospects. Our research shows that stocks with a Growth Style Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential.

The company currently carries a Zacks Rank #3 (Hold).

 


Factors Driving DexCom

Strong Segmental Growth Drives Share: The market seems to be upbeat about the company registering strong segmental growth in the last reported quarter. Rise in all channels and geographies along with increased volume contributed to its growth. The company is consistently growing in terms of patient addition, which also buoys optimism.

Revenue Guidance Upbeat: Exiting a robust first half of 2019 and observing a steady demand for DexCom real-time CGM, it raised its yearly revenue guidance by more than 10% indicating that this momentum will continue throughout the rest of the year. This also increased investors’ optimism on the stock.

Series of Developments Buoys Optimism: The market also seems upbeat about DexCom’s series of developments. In June, the company announced collaboration with Companion Medical, Inc. to allow a direct exchange of CGM data from Dexcom with insulin data from InPen into both companies’ software applications. The agreement is the first of its kind and it paves the way for advanced diabetes decision support, which is an important tool for insulin users.

On the regulatory front, in February DexCom reached a milestone, with the receipt of Health Canada approval for its next-generation Dexcom G6 CGM System for people with diabetes (aged two years and up), thus making it available in Canada.

Strong International Presence: Investors also seem bullish on strong adoption of Dexcom G6 in the European market. The company is targeting sizeable markets of Korea, India, China and Japan. In this regard, the industry is expected to reach approximately $1325.9 million globally at a CAGR of 15.8% between 2019 and 2025.

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Stocks to Consider

Some better-ranked stocks in the broader medical space are Integer Holdings Corporation ITGR, Intuitive Surgical, Inc. ISRG and Masimo Corporation MASI.

Integer Holdings currently sports a Zacks Rank #1. Its third-quarter earnings growth rate is projected at 7.7%.

Intuitive Surgical’s long-term expected earnings growth rate is 13.3%. The stock currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term expected earnings growth rate is 20.5%. The stock has a Zacks Rank #2 at present.

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Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report
 
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
 
Masimo Corporation (MASI) : Free Stock Analysis Report
 
DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
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