EU and US could reach trade deal this weekend - Reuters
On Tuesday, Citi reaffirmed its Buy rating and $104.00 price target for DexCom (NASDAQ:DXCM), following the public release of a Warning Letter from the FDA. The letter, originally sent on March 4, 2025, detailed violations found during inspections of DexCom’s facilities in California and Arizona last year. The FDA identified that the G6 and G7 Continuous Glucose Monitoring Systems (CGMs) were considered adulterated due to non-conformance with proper manufacturing practices, citing seven specific violations. According to InvestingPro data, DexCom, currently valued at $28.5 billion, trades above its Fair Value, though analysts maintain a strong bullish stance on the stock.
The issues highlighted by the FDA revolved around sensor-related processes, including calibration checks and glucose level testing intervals, rather than direct patient safety concerns. Citi analyst Joanna Wuensch noted that, according to discussions with DexCom management, the warning is not expected to affect the company’s revenue or margin guidance. Additionally, any incremental expenses related to addressing the FDA’s concerns had already been anticipated. The company maintains strong financials with an 11.34% revenue growth and a healthy 60.46% gross profit margin. InvestingPro subscribers can access 12 additional key insights about DexCom’s financial health, which is rated as GREAT by the platform’s comprehensive scoring system.
DexCom management also indicated that the FDA’s warning would not hinder the approval process for its upcoming 15-day sensor, which is expected to receive clearance around the middle of the year. Warning letters from the FDA, while not ideal, are not uncommon, particularly those related to quality system regulation. Companies typically respond by improving their manufacturing processes to comply with regulations.
Citi’s stance on DexCom remains unchanged despite the FDA’s warning. The firm’s analysts believe that the issues identified are manageable and that the company is well-positioned to address them without significant impact on its financial outlook or product pipeline progression. DexCom’s commitment to resolving the outlined violations and moving forward with its product approvals appears to align with Citi’s positive outlook on the stock.
In other recent news, DexCom reported its fourth-quarter earnings, which fell short of analyst expectations. The company announced adjusted earnings per share of $0.45, missing the consensus estimate of $0.52, although revenue slightly exceeded expectations at $1.11 billion, marking an 8% year-over-year increase. For the full year 2024, DexCom’s revenue rose by 11% to $4.03 billion, with U.S. revenue increasing 10% and international revenue up 15%. Looking forward, DexCom has projected 2025 revenue of approximately $4.6 billion, slightly below the consensus of $4.61 billion.
In other developments, DexCom received a warning letter from the FDA concerning deficiencies in manufacturing processes, though the company assured that this would not impact its production or financial forecasts. BTIG analysts maintained a Buy rating on DexCom, with a $120 price target, despite the FDA’s warning. Additionally, Bernstein analysts raised their price target for DexCom to $100, citing a return to stability and organic growth in the latter half of 2024. Furthermore, DexCom announced the appointment of Renée Galá to its Board of Directors, bringing her extensive experience in the life sciences sector to the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.