Here's Why You Should Add DexCom (DXCM) to Your Portfolio
DexCom, Inc. DXCM is well poised for growth on the back of solid international presence and robust product portfolio.
The stock has gained 212.8%, compared with the industry’s growth of 14.3% in a year’s time. Further, the S&P 500 Index rose 11.1% in the same time frame.
The company — with a market capitalization of $35.67 billion — is a medical device company focused on the design, development and commercialization of continuous glucose monitoring systems (CGM). The company has a trailing four-quarter positive earnings surprise of 218.2%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #2 (Buy).
Key Catalysts
DexCom continues to focus on international markets, particularly Germany. Management announced in first-quarter 2020 earnings call that the company continues to see significant growth in direct markets like Germany and the U.K. with its distributor markets growing substantially with strength across the board.
In first-quarter 2020, international revenues (19% of total revenues) surged 61.1% year over year to $112.8 million. International growth remains strong and poses a great opportunity in the future on the back of improving global access and awareness.
DexCom's FDA-cleared CGM system — the DexCom G4 Platinum — is significantly boosting the company’s top line. The inbuilt features of the G4 Platinum make it the most innovative system for continuous glucose monitoring in the market.
In January 2020, Tandem Diabetes launched its latest integrated pump offering — the Control-IQ system — integrating the DexCom G6 sensor and its type zero algorithm to automated insulin delivery. Interestingly, this is the first integrated system to provide automated correction boluses based on the customer CGM ratings in its AP algorithm.
Dexcom’s Insulet and Lilly diabetes management products are also progressing well. In December 2019, Insulet commenced the important trial, and thereby remains on track for a launch later in 2020.
Per the first-quarter 2020 earnings call, the FDA was quick to enable the use of DexCom CGM in the hospital setting and other healthcare facilities to lend support to COVID-19 healthcare related efforts, thereby further boosting demand for the product.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $1.77 billion, indicating growth of 20.2% from the previous year. The same for adjusted earnings per share stands at $2.23, suggesting an improvement of 21.2%.
Other Stocks to Consider
Some other top-ranked stocks from the broader medical space include Aphria Inc. APHA and HMS Holdings Corp. HMSY and West Pharmaceutical Services, Inc. WST. While Aphria and HMS Holdings carry a Zacks Rank #2, West Pharmaceutical sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Aphria has an estimated long-term earnings growth rate of 24.6%.
HMS Holdings has an estimated long-term earnings growth rate of 11%.
West Pharmaceutical has a projected long-term earnings growth rate of 9.2%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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