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On Friday, Stifel has adjusted its outlook for DexCom (NASDAQ:DXCM), a medical device company specializing in continuous glucose monitoring (CGM) systems. The firm has lowered the price target on DexCom's shares to $132 from the previous $145 while maintaining a Buy rating on the stock.
The adjustment comes as DexCom prepares for the U.S. launch of its new product, Stelo, alongside competitors like Abbott's Rio/Lingo. Stifel's decision is based on a series of factors, including early physician survey work on Type 2 Non-Insulin (T2NIT) CGM penetration, utilization, and market share expectations. Additionally, new data points to a higher-than-expected interest in wearable biosensors among U.S. non-diabetics.
Stifel revisited its discounted cash flow (DCF) analysis for DexCom to assess the extent to which the market has already accounted for the value of Stelo. While acknowledging the uncertainties and the unknowns that could affect interest levels, such as pricing, Stifel's ongoing research indicates significant interest in CGM products not only from Type 2 diabetics but also from healthy consumers in the U.S.
The firm's report suggests that DexCom's stock has been underperforming as investors weigh the competitive dynamics in the CGM market. However, Stifel believes that the positive feedback from potential non-insulin and non-diabetic users, when compared to current market expectations and valuation, indicates that the launch of Stelo could provide the momentum needed to drive DexCom's shares upward. The firm will continue to monitor and update metrics to track and gauge the adoption trends of Stelo.
In other recent news, DexCom, a pioneer in real-time continuous glucose monitoring (CGM) technology, has reported significant developments. The company's Q1 revenue surged to $921 million, marking a 24% year-over-year growth. Additionally, DexCom has announced the integration of its Dexcom (NASDAQ:DXCM) G6 CGM system with the Omnipod® 5 Automated Insulin Delivery (AID) System in the Netherlands, a move expected to simplify diabetes management for the 100,000 Dutch individuals living with Type 1 diabetes.
In terms of product development, DexCom's G7 CGM System now pairs directly with Apple (NASDAQ:AAPL) Watch, becoming the first CGM system to offer real-time glucose readings on a user's wrist without an iPhone. Furthermore, DexCom is set to launch its over-the-counter CGM product, Stelo, in the upcoming summer.
InvestingPro Insights
As DexCom (NASDAQ:DXCM) navigates the competitive landscape of continuous glucose monitoring systems with the launch of its new Stelo product, real-time data from InvestingPro provides a deeper dive into the company's financial health and market performance. DexCom's aggressive share buyback strategy, highlighted in one of the InvestingPro Tips, underscores management's confidence in the company's value. Additionally, DexCom's recent trading at a P/E ratio that is low relative to its near-term earnings growth suggests potential for investors, despite a high earnings multiple.
InvestingPro Data paints a picture of robust financials, with a market capitalization of $44.8 billion USD and a striking 25.78% revenue growth over the last twelve months as of Q1 2024. This growth is complemented by a healthy gross profit margin of 62.82%, indicating strong operational efficiency. Moreover, the company's EBITDA growth of 52.12% over the same period signals an impressive expansion of earnings before interest, taxes, depreciation, and amortization.
For investors seeking additional insights and analysis, InvestingPro offers a comprehensive list of tips for DexCom. With the use of coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking access to valuable metrics and expert opinions that could inform investment decisions. There are 14 more InvestingPro Tips available for DexCom, including observations on profitability, debt levels, and valuation multiples, which provide a multifaceted view of the company's financial standing.
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