You make some great points and some not so true points... but I generally like your message. The fact is that the day trading this thing is flat out silly. Maybe trade around your position, but these guys should get bought and don't get too cute and let some chart get you out the night that JNJ buys these guys for $30. DXCM cannot leverage their technology to the extent a JNJ, Roche, ABT even could, and the sale will take place. It's about the price.
MDT has a similar product that's available in select cities called the Guardian RT. So there is a competitor in MDT. Insurance you say will happen in a month - it will be around a year best case... it's a long arduous process, and to me that's the biggest overhang on the stock.
These guys don't make money on shower guards, they make money on the sensors. The sensors are $35 each and need to be replaced every 3 days. That's $350/month or >$4000/year per user. The device costs $800. It's expensive. I'm not even going to think of modeling down to earnings as you do but suffice it to say your #s and 10x multiple are absurd.
I think this is the biggest thing to hit Diabetes treatment in years. Do not underestimate the revenue power of this product or how important it is to the big hitters in med devices (as we know, blood glucose testing is a $6bn market/year!). But be realistic, valuation is decently rich - it's going to be a difficult ramp up for a small salesforce with no insurance coverage and a tough competitor in MDT.
I know that there were alot of flaws in my valuation, but I got someone talking more than just 4 letter words about the stock.
Something to keep in the back of your mind though, McDonald's main product is real estate, not hamburgers. In 1998 they owned more land than the catholic church on an international level. I don't know what the statistics for today are.
There is alot of money in peripherals just as the main source of income for traditional glucose readers is the test strips not the initial sale of the meter.
Yeah, it's a ton. $800 for the device and $35 per sensor. Each sensor lasts 3 days so multiply that by ~120 and you get >$4000. The Medtronic device alone costs $2800, then add in I believe $40 per sensor (but I'mnot sure). Insulin pumps cost around $5000 just for the device. More $$ is spent on Diabetes than any other disease in the world.
0% insurance coverage for the DXCM device... hopefully by 2007.