Here's Why You Should Hold on to DexCom (DXCM) Stock Now
DexCom, Inc. DXCM is well-poised for growth, backed by a robust product portfolio and a strong international presence. However, supply constraints remain a concern.
Shares of the Zacks Rank #3 (Hold) company have gained 37.7% against the industry’s decline of 1.2% in a year’s time. Meanwhile, the S&P 500 Index has rallied 14.9%.
DexCom — with a market capitalization of $46.69 billion — is a medical device company focused on the design, development and commercialization of continuous glucose monitoring systems (CGM). It anticipates earnings to improve by 3.4% over the next five years. The company beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 26.5%.
Key Catalysts
Per the fourth-quarter 2021 earnings call, the company strengthened its product portfolio via differentiated software with the CE Mark and the launch of its Dexcom ONE product in the quarter under discussion. Since the launch of this product, the company has already witnessed strong adoption in both type one and type two customers, and the health systems in two of its four launch countries established reimbursement.
During the third quarter, the company launched Dexcom ONE, which will be an important addition to its portfolio as DexCom progresses to widen access to healthcare for people with diabetes worldwide.
Apart from this, DexCom received FDA clearance for two crucial software solutions that will help bolster its connected ecosystem. The first one is the DexCom real-time API, which makes it possible for third-party developers to incorporate real-time CGM data into their digital health apps and devices. This, in turn, offers Dexcom users a wide array of options when it comes to engagement with their glucose data. The second one is the company’s app-in-app module that directly integrates with third-party healthcare apps, thereby making managing diabetes easier for Type 2 Non-intensive insulin therapy (NIIT) users by enabling a convenient, single-app experience.
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In fourth-quarter 2021, international revenues (26% of total revenues) surged 54% year over year to $181.1 million. During the fourth quarter, international growth was broad-based throughout all markets, with all these markets delivering record sales in the quarter under review. DexCom’s market expansion initiatives internationally are all progressing according to plan, thereby driving high volume growth. Thus, international growth remains strong and presents future prospects, courtesy of improving global access and awareness.
Factor Hurting the Stock
DexCom relies on third parties for an assured steady supply of inputs. Thus, the capacity constraint for the production of its offerings might dampen the company’s growth prospects.
Estimates Trend
The Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $619.9 million, suggesting growth of 22.7% from the year-ago reported number. The same for earnings stands at 52 cents, indicating an improvement of 57.6% from the prior-year quarter.
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. AMN, Henry Schein, Inc. HSIC and McKesson Corporation MCK.
AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 8.8% compares favorably with the industry’s 0.3%.
Henry Schein beat earnings estimates in each of the trailing four quarters, the average surprise being 25.5%. The company currently sports a Zacks Rank #1.
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.6% compares favorably with the industry’s 4.1%.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20.6%. The company currently carries a Zacks Rank #2 (Buy).
McKesson’s long-term earnings growth rate is estimated at 11.8%. MCK’s earnings yield of 8.8% compares favorably with the industry’s 4.1%.
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McKesson Corporation (MCK) : Free Stock Analysis Report
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