Street Calls of the Week
Investing.com - Piper Sandler has reiterated an Overweight rating and $100.00 price target on DexCom (NASDAQ:DXCM) ahead of the company’s third-quarter earnings report, scheduled for October 30. According to InvestingPro data, analysts’ targets range from $83 to $115, with the current stock price suggesting significant upside potential.
The research firm expressed confidence in DexCom’s upcoming financial results, suggesting that investors should consider buying the stock at current levels. With a GREAT Financial Health score and robust revenue growth of 9.3% over the last twelve months, InvestingPro analysis supports this positive outlook. Piper Sandler noted that the market setup for DexCom shares appears favorable despite investor concerns about G7 continuous glucose monitoring system quality issues.
The firm stated that these G7 quality concerns have not impacted prescription patterns from doctors, while also addressing perceived soft results from Abbott Laboratories this quarter. Piper Sandler characterized Abbott’s results as "good off a strong comp and some idiosyncratic growth pull-forward during the first half of the year." InvestingPro analysis reveals that DexCom maintains a healthy current ratio of 1.52 and operates with moderate debt levels, suggesting strong operational stability.
DexCom faces what Piper Sandler described as "an easy comp in Q3," with the research firm expecting the company to at least meet and likely beat third-quarter revenue estimates. The firm believes the continuous glucose monitoring market remains strong overall. Unlock comprehensive earnings analysis and 10+ additional ProTips with an InvestingPro subscription, including exclusive insights into DexCom’s valuation metrics and growth potential.
Piper Sandler highlighted that DexCom stock is currently trading at its lowest valuation level in years, falling below even the second-quarter 2024 pullback level, which contributes to what the firm calls a "compelling" setup for the stock. While the stock trades at a P/E ratio of 47.4x, InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels.
In other recent news, DexCom has been the focus of multiple analyst reports and developments concerning its G7 continuous glucose monitoring system. Stifel resumed coverage of DexCom with a Buy rating, highlighting the company’s increasing market share in the Type 2 diabetes segment, particularly due to the favorable reception of its G7 15-day sensor. TD Cowen also reiterated its Buy rating and maintained a price target of $100, noting that earlier deployment and accuracy issues with the G7 system have mostly been resolved. However, UBS defended its Buy rating and $106 price target despite a recent sell-off triggered by concerns over the G7 sensor, which has been linked to increased MAUDE events and injuries.
Compounding these concerns, Hunterbrook Media published a critical short report alleging serious safety issues with the G7 device, including inaccurate readings that reportedly led to hospitalizations and deaths. The report also claimed that an FDA inspection found an unauthorized design change in the G7, which was deemed inferior in accuracy. In response to these challenges, Oppenheimer downgraded DexCom’s stock rating from Outperform to Perform, citing competition concerns and ongoing issues with the G7 device. These developments highlight a complex landscape for DexCom as it navigates both positive analyst support and significant challenges with its G7 system.
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