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On Friday, Bernstein SocGen Group analysts increased their price target for DexCom (NASDAQ:DXCM) shares, setting it at $100.00, up from the previous $89.00, while reaffirming their Outperform rating. Currently trading at $84.09 with a market capitalization of $32.85 billion, InvestingPro analysis suggests the stock is currently undervalued. The adjustment comes after DexCom demonstrated a return to stability in the second half of 2024, following a challenging second quarter that year which had shaken investor confidence.
DexCom pre-announced their fourth-quarter 2024 revenue on January 13, 2025, reporting an organic growth of 8% to $1.114 billion, which was approximately 1.5% above the consensus. This performance was bolstered by a record number of new user additions both in the U.S. and globally. The company's strong financial position is evident in its "GREAT" financial health score from InvestingPro, with a robust current ratio of 2.46 and impressive revenue growth of 16.19% over the last twelve months. The company also provided an initial sales forecast for 2025, projecting a 14% increase in revenue to $4.6 billion, aligning with the lower end of the long-range plan (LRP) of $4.6 billion to $5.1 billion presented at DexCom's investor day in June 2023.
Analysts noted that the recent results and guidance were well received by the market, signaling that DexCom is moving forward in addressing issues related to sales force productivity and Direct Medical (TASE:PMCN) Equipment (DME) market share loss. The company's efforts are seen as steering it back toward a more typical growth trajectory. For deeper insights into DexCom's valuation and growth prospects, InvestingPro subscribers have access to over 30 additional financial metrics and expert analysis in the comprehensive Pro Research Report.
The revised price target of $100 is based on a price-to-sales (P/S) multiple of 7.5 times, up from the previous 7.0 times, applied to the fiscal year 2026 sales estimates of $5.33 billion, which itself has been revised up from an earlier forecast of $5.19 billion. While the stock currently trades at a P/E ratio of 48.18, Bernstein analysts highlighted that their target P/S multiple remains significantly lower than the 10 times plus levels at which DexCom's stock was trading before the disappointing second quarter of 2024.
In other recent news, DexCom, Inc. reported its fourth-quarter earnings, which fell short of analyst expectations. The company's adjusted earnings per share for Q4 were $0.45, missing the consensus estimate of $0.52. However, revenue was slightly above forecasts, coming in at $1.11 billion, an 8% increase year over year. For the full year of 2024, DexCom's revenue grew by 11% to $4.03 billion, with U.S. revenue and international revenue increasing by 10% and 15% respectively.
Looking ahead, DexCom's revenue forecast for 2025 is approximately $4.6 billion, slightly below the consensus of $4.61 billion. The company also expects a non-GAAP gross profit margin of 64-65% and a non-GAAP operating margin of about 21%. In 2024, DexCom expanded its U.S. commercial sales force, launched two major products, Dexcom One+ and Stelo, and submitted its G7 15-day product to the FDA. These are recent developments that the company is looking to build upon in 2025.
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