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Here's Why You Should Add DexCom (DXCM) to Your Portfolio

Zacks Equity Research

DexCom, Inc. DXCM is likely to gain from solid third-quarter 2019 results and a raised view.

Shares of this company have rallied 89.6% compared with the industry’s 17.8% rise in a year’s time. The current level also compares favorably with the S&P 500 index’s 15.7% gain over the same time frame.

This $19.44-billion medical device company currently has a Zacks Rank #2 (Buy). DexCom’s earnings are expected to grow 31.48% in the fourth quarter. Also, the company has a trailing four-quarter positive earnings surprise of 189.7%, on average.

The stock also has a Growth Score of A. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, are better picks than most.

Let’s take a closer look at the factors that are working in favor of the company right now.

Q3 Results & Guidance

In the recently-reported third quarter, DexCom reported adjusted earnings per share (EPS) of 65 cents, surpassing the Zacks Consensus Estimate of 18 cents by a huge mark. Moreover, the bottom line skyrocketed 261.1% from the prior-year quarter.
Total revenues surged 48.6% to $396.3 million on a year-over-year basis and also surpassed the Zacks Consensus Estimate by 13.5%.

Per management, rising volumes across all channels, strong new patient additions and increasing global awareness of the benefits of real-time CGM contributed to the upside.

Geographically, U.S. revenues shot up 52.6% on a year-over-year basis to $308.8 million, while international revenues improved 36.1% year over year to $87.5 million.

Reflective of this, DexCom issued a solid guidance for 2019.

Notably, revenues are expected in the range of $1.43-$1.45 billion, up from the previously guided range of $1.33-$1.38 billion. Gross profit margin is projected at around 63% compared with the prior estimated range of 64% to 65% of net revenues.

Adjusted operating margin is projected to be about 9% of net revenues versus the previous projection of 7%. Adjusted EBITDA margin is anticipated at 19.5%, compared with the prior estimate of 18.5%.

DexCom, Inc. Price and Consensus

DexCom, Inc. Price and Consensus
DexCom, Inc. Price and Consensus

DexCom, Inc. price-consensus-chart | DexCom, Inc. Quote

Which Way Are Estimates Headed?

For 2019, the Zacks Consensus Estimate for revenues is pegged at $1.45 billion, indicating an improvement of 40.1% from the year-ago quarter’s reported figure. For adjusted EPS, the same stands at $1.42 per share, suggesting a massive upside of 373.3% from the year-ago reported figure.

Other Stocks to Consider

Other top-ranked stocks from the broader medical space are CONMED Corporation CNMD, HealthEquity HQY and West Pharmaceutical Services WST. While CONMED and West Pharmaceutical currently carry a Zacks Rank #2, HealthEquity sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conmed has a long-term earnings growth rate of 17%.

HealthEquity has a long-term earnings growth rate of 25%.

West Pharmaceuticals has a long-term earnings growth rate of 14%.

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DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
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HealthEquity, Inc. (HQY) : Free Stock Analysis Report
 
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