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On Wednesday, RBC Capital Markets maintained a positive outlook on DexCom shares (NASDAQ:DXCM), reiterating an Outperform rating and a $100.00 price target. Following a Non-Deal Roadshow (NDR) that took place on Tuesday, RBC Capital’s analyst highlighted several factors that suggest DexCom is poised for significant growth and that the market may be undervaluing its potential. This assessment aligns with InvestingPro data, which shows DexCom currently trades below its Fair Value, with analysts maintaining a strong buy consensus and setting targets up to $110.
The analyst noted that despite awareness of DexCom’s growth opportunities, these factors are not fully appreciated by the market. The commentary emphasized the company’s potential to outperform its own 2025 financial guide, suggesting that there is room for DexCom to exceed and elevate its targets. InvestingPro data supports this growth narrative, revealing a projected 14% revenue growth for FY2025 and an impressive five-year revenue CAGR of 22%. For deeper insights into DexCom’s growth metrics and valuation analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
One of the key points raised was the expansion of U.S. Pharmacy Benefit Manager (PBM) coverage, which is expected to be the largest in DexCom’s history. By the end of 2025, the coverage is anticipated to extend to approximately 6 million lives, a milestone the analyst believes is currently underestimated by investors.
Additionally, the analyst pointed to DexCom’s increasing profitability, with mid-60s gross margins (GMs) and an annual operating expense (OpEx) leverage of 100-200 basis points contributing to earnings per share (EPS) growth. This financial leverage is expected to drive profits and support the company’s upward trajectory. Current InvestingPro data shows the company maintains healthy gross margins of 59.43% and operates with moderate debt levels, earning a "GREAT" financial health score.
The analyst’s commentary concluded with a reiteration of the Outperform rating and the $100.00 price target for DexCom stock, indicating confidence in the company’s future performance and the perceived undervaluation by the market.
In other recent news, DexCom reported first-quarter revenue of $1.04 billion, surpassing analyst estimates of $1.02 billion, marking a 12% year-over-year increase on a reported basis and 14% on an organic basis. Despite this revenue success, adjusted earnings per share fell slightly short of expectations at $0.32, missing by one cent. U.S. revenue grew by 15% year-over-year, while international revenue saw a 12% increase on an organic basis, although it did not meet the consensus expectation. BTIG and Canaccord Genuity both raised their price targets for DexCom, to $109 and $106 respectively, maintaining a Buy rating, while Bernstein lowered its target to $88 but kept an Outperform rating.
Analysts from BTIG highlighted DexCom’s strong return to previous performance levels, noting a 14% year-over-year organic growth and a $750 million share repurchase program. Canaccord Genuity emphasized DexCom’s robust U.S. sales and potential in the Type 2 non-insulin market, while Bernstein acknowledged risks such as competition and supply chain challenges. The company reiterated its revenue guidance for 2025 at $4.60 billion, closely aligning with analyst consensus, and updated its non-GAAP gross profit margin guidance to approximately 62% for the year. DexCom’s financial flexibility is underscored by $2.70 billion in cash, cash equivalents, and marketable securities, positioning the company well for future opportunities.
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