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On Friday, Goldman Sachs began covering DexCom (NASDAQ:DXCM) shares, assigning a Buy rating and setting a 12-month price target of $104.00. The new coverage comes with a positive outlook on the medical device company’s future, highlighting the potential for growth and profitability. According to InvestingPro data, DexCom has demonstrated solid performance with a revenue growth of 9.11% and maintains a robust gross margin of 59.43%. The company’s financial health score is rated as "GREAT" by InvestingPro’s comprehensive analysis system.
DexCom, known for its glucose monitoring systems, has been recognized by Goldman Sachs for its innovative technology and the opportunities it presents for long-term growth. The firm’s analysts believe that DexCom’s financial performance will strengthen over the course of the year, driven by the company’s ability to leverage its profit and loss statement. InvestingPro analysis reveals that management has been actively buying back shares, showing confidence in the company’s future prospects. Discover 12 more exclusive InvestingPro Tips and comprehensive analysis in the Pro Research Report.
The analysts at Goldman Sachs also see an untapped potential in consumer adoption that has not yet been factored into DexCom’s guidance or the firm’s own estimates. This aspect of the market could provide an additional upside to the company’s performance.
A significant part of the optimistic forecast is based on the expectation of strong profit and loss leverage throughout 2025. According to Goldman Sachs, the market has not fully acknowledged the extent to which DexCom’s gross margins could scale, leading to earnings per share growth and potential to counterbalance any nominal price-to-earnings multiple compression.
The firm’s analysts underscored their confidence in DexCom’s financial trajectory by stating, "We think the market underappreciated the degree of P&L upside in the model as gross margins scale, as we see EPS growth and upside sufficient to offset nominal P/E multiple compression."
With the initiation of coverage and the setting of a $104 price target, Goldman Sachs has conveyed a strong vote of confidence in DexCom’s market position and financial outlook. While the company currently trades at premium multiples, InvestingPro analysis indicates strong fundamentals with sufficient cash flows to cover interest payments and a moderate debt level. DexCom’s shares will be closely watched by investors as the company aims to capitalize on its technological edge and expand its consumer base in the coming year. Access the complete Pro Research Report for detailed valuation metrics and expert analysis of DexCom’s market position.
In other recent news, DexCom reported first-quarter revenue of $1.04 billion, surpassing analyst estimates of $1.02 billion. This represents a 12% increase year-over-year on a reported basis and 14% on an organic basis, although adjusted earnings per share fell slightly short at $0.32 compared to the expected $0.33. DexCom’s U.S. revenue saw a 15% increase year-over-year, while international revenue grew 7% on a reported basis and 12% organically. The company reiterated its revenue guidance for the full fiscal year 2025 at $4.60 billion, closely aligning with analyst consensus. BTIG raised its price target for DexCom to $109, maintaining a Buy rating, highlighting the company’s significant growth in the Type 2 diabetes segment. Canaccord Genuity also lifted its price target to $106, noting the company’s strong U.S. sales and potential in the Type 2 non-insulin market. Meanwhile, Bernstein adjusted its price target to $88, maintaining an Outperform rating, citing growth catalysts alongside potential risks. RBC Capital Markets reiterated an Outperform rating with a $100 target, emphasizing DexCom’s expanding U.S. Pharmacy Benefit Manager coverage and profitability.
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