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On Friday, Canaccord Genuity reaffirmed its positive stance on DexCom shares, maintaining a Buy rating and a $103.00 price target. The endorsement follows DexCom's announcement that its 15-day G7 Continuous Glucose Monitoring (CGM) system has received clearance from the U.S. Food and Drug Administration (FDA) for use by adults with diabetes. According to InvestingPro data, DexCom has shown strong momentum with a 12.5% return over the past week, though the stock remains significantly below its 52-week high of $141.25. The clearance is particularly noteworthy in light of an outstanding warning letter DexCom received on March 4, 2025, which had cast doubt among investors about the approval timeline.
Despite the FDA's cautionary communication, DexCom's management remained confident about receiving the necessary clearance. Historically, FDA warning letters have often led to delays in approvals or clearances in the diabetes sector, contributing to investor skepticism. However, DexCom's recent achievement has been seen as a significant step forward, potentially closing the technology gap with Abbott's FreeStyle Libre 2 CGM, which offers a 14-day wear time.
The 15-day G7 CGM system not only matches the wear time of its competitors but surpasses it, boasting a 15.5-day lifespan. This extension is expected to offer a margin benefit for DexCom, reducing the number of CGMs users require from three to two per month, while maintaining the same reimbursement rate, which is calculated on a per-day basis. The company's strong financial position is evident in its impressive 60.5% gross profit margin and robust revenue of $4.03 billion in the last twelve months. InvestingPro analysis reveals 13 additional key insights about DexCom's financial health and market position, available to subscribers. The company highlights that this latest CGM iteration delivers the longest-lasting performance in the market and features best-in-class accuracy with an overall Mean Absolute Relative Difference (MARD) of 8.0%.
Additional attributes of the 15-day G7 include its waterproof design, compatibility with the Apple (NASDAQ:AAPL) Watch, and enhanced user experience with simplified meal and medication logging. It also offers a 12-hour grace period for sensor replacement, which minimizes interruptions for users. According to DexCom's FY25 guidance, the launch of the 15-day G7 is anticipated in the second half of 2025.
The new G7 model incorporates a slightly altered algorithm and firmware compared to previous versions, which means it will be classified as a different stock-keeping unit (SKU), require distinct reimbursement procedures, and need integration with insulin pumps. During the Q4 earnings call, DexCom's management indicated that pump integration is expected to be a swift process.
The recent developments were also a topic of discussion at the Advanced Technologies & Treatments for Diabetes (ATTD) meeting in Amsterdam, where Canaccord Genuity analysts had the opportunity to engage with various international CGM players.
In other recent news, DexCom announced the FDA clearance of its Dexcom (NASDAQ:DXCM) G7 15 Day Continuous Glucose Monitoring (CGM) System for adults, which is expected to launch in the second half of 2025. The system, claimed to be the most accurate CGM with a Mean Absolute Relative Difference (MARD) of 8.0%, extends the wear period to 15 days, reducing the number of sensors needed per month. Analysts from Raymond (NSE:RYMD) James, BTIG, and Stifel have maintained their positive outlook on DexCom, with price targets of $99, $120, and $100, respectively, citing the potential for improved gross margins and financial performance. The analysts highlighted that the new sensor could significantly enhance DexCom's margins by over 10% without major price changes. Additionally, the transition from a 10-day to a 15-day sensor is expected to cut the Cost of Goods Sold by approximately 33%, despite the added warranty responsibilities. The new device is designed to connect directly to an Apple Watch, offering users a hands-free glucose monitoring experience. DexCom's strategy includes ensuring compatibility with automated insulin delivery systems to boost product adoption. The company is poised to strengthen its market presence and improve diabetes management solutions with this latest advancement.
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