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On Monday, DexCom (NASDAQ:DXCM) shares received an optimistic update from Redburn-Atlantic, with analyst Issie Kirby (NYSE:KEX) upgrading the stock from Neutral to Buy and increasing the price target to $115 from the previous $85. Kirby highlighted DexCom’s promising position in the continuous glucose monitoring (CGM) market, which is expected to drive a 16% revenue compound annual growth rate (CAGR) from fiscal year 2024 to 2027. This aligns with the company’s strong track record, having achieved 16.2% revenue growth over the last twelve months. According to InvestingPro analysis, DexCom maintains a "GREAT" financial health score of 3.27, suggesting robust operational performance.
The analyst pointed out DexCom’s potential for expansion into the Type 2 non-insulin segment, which remains underpenetrated. Kirby’s confidence is further bolstered by the forthcoming next-generation G8 sensor. Additionally, the analyst noted that DexCom’s revenue mix has found stability following the US pharmacy transition. The company’s solid financial position is evident in its healthy current ratio of 2.46, indicating strong ability to meet short-term obligations.
Kirby’s analysis of the 15-day sensor rollout suggests there is potential for margins to exceed expectations, positioning DexCom approximately 11% ahead of consensus earnings per share (EPS) forecasts for fiscal year 2027. The projected ~24% EPS CAGR from fiscal year 2024 to 2027 indicates a price-to-earnings growth (PEG) ratio of 1.7x. According to Kirby, DexCom’s current valuation does not fully reflect the anticipated improvement in earnings growth.
The upgrade and price target adjustment reflect a positive outlook for DexCom’s financial performance and market position over the next few years. DexCom’s advancement in technology and market strategy appears to be aligning well with the growth opportunities in the CGM sector.
In other recent news, DexCom, a medical device company, has reported notable developments. The company’s fourth-quarter sales exceeded expectations, reaching $1.113 billion, and they project sales of $4.6 billion for 2025. DexCom also achieved a record number of new users, ending the year with an estimated 2.8 to 2.9 million worldwide users, marking a 25% year-over-year increase.
However, DexCom’s gross margin fell short of expectations due to a one-time inventory issue, despite maintaining a gross profit margin of 61.68% over the last twelve months. DexCom has also settled patent disputes with Abbott, signing a cross-license agreement, a significant step towards collaboration in the field of analyte sensing technology.
Analysts from Raymond (NSE:RYMD) James, Piper Sandler, and Citi have all maintained positive ratings for DexCom. Raymond James reiterated a Strong Buy rating, while Piper Sandler and Citi reaffirmed their Overweight and Buy ratings, respectively. These ratings are based on the company’s impressive revenue growth and potential for future expansion.
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