DexCom Scales 52-Week High on Product Pipeline Strength
Shares of DexCom, Inc. (DXCM) closed at a new 52-week high of $53.50 on Nov 10, translating into a solid one-year return of roughly 62%. In fact, shares of this CA-based glucose monitoring systems provider have been on the rise since the beginning of this year, posting an impressive year-to-date return of around 51%.
DexCom has a market cap of around $4 billion while average volume of shares traded over the last three months stands at roughly 0.6 million.
Catalysts for Growth
Impressive third-quarter 2014 results indicating double-digit top-line growth, a string of U.S. Food and Drug Administration (:FDA) approvals for its new products over the last few months along with a robust product pipeline contribute to the growth trajectory of this company, creating good momentum for 2015 as well.
This week, FDA approved a new algorithm designed for DexCom’s G4 Platinum Continuous Glucose Monitoring (CGM.V) system, following which shares of the company shot up around 14%. With this new technology, the G4 Platinum system approaches a MARD (Mean Absolute Relative Difference) measurement of 9%, making it the first and only CGM system in the market with a single-digit MARD.
Last month, the FDA cleared DexCom’s CGM remote mobile communications device – DexCom SHARE, which enables wireless transmission of a patient’s glucose information to the G4 Platinum receiver. Following the approval, DexCom launched the device, making significant advances toward extending CGM to mobile devices.
In the recently reported third-quarter 2014, the company’s losses remained flat on a year-over-year- basis. Revenues, on the other hand, surged 60.8% driven by continued growth in the installed base of customers using the G4 Platinum system.
Gross margins also expanded primarily due to greater sales of the high margin G4 Platinum system. Higher gross margin base, along with strong revenue growth further led to narrower operating losses in the quarter.
Going forward, DexCom expects to drive greater sales volume and improved margins as it makes significant investments and launches new products. It is extremely optimistic with regard to its G4 Platinum system which has been driving superior product revenue growth.
However, the company continues to face stiff competition from Johnson and Johnson (JNJ) Abbott Laboratories (ABT) and Medtronic (MDT), which remains a headwind.
Currently, DexCom carries a Zacks Rank #3 (Hold).
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