Here's Why You Should Retain DexCom Stock in Your Portfolio for Now

DexCom, Inc. DXCM is well-poised for growth in the coming quarters, backed by its strong product portfolio. A better-than-expected third-quarter 2024 performance and a series of favorable coverage decisions are expected to contribute further. However, risks related to stiff competition persist.This Zacks Rank #3 (Hold) company’s shares have lost 36.5% year to date against the industry’s 6.7% growth. The S&P 500 Index has soared 28.6% in the same time frame.DXCM, a renowned medical device company and provider of continuous glucose monitoring (CGM) systems, has a market capitalization of $31.43 billion. It projects 19.1% growth over the next five years and expects to maintain a strong performance going forward.DexCom’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 12.43%.Image Source: Zacks Investment ResearchLet’s delve deeper.Strong Product Demand: We are upbeat about DexCom's continued strength in CGM products.DexCom demonstrated strong product demand in third-quarter 2024, highlighted by record new patient starts in its core markets. The flagship G7 and DexCom ONE+ platforms continued to drive adoption internationally, with launches in key regions such as France, Australia and Japan bolstering growth. Early success with the newly introduced Stelo Biosensor in the United States reflects significant interest in addressing non-intensive insulin users and broader metabolic health needs. More than 50% of Stelo users opted for subscriptions, signaling promising recurring revenue potential. These trends underscore DexCom’s growing market presence and the effectiveness of its innovative solutions in diabetes management and metabolic health.New Product Launch: Last month, DexCom inked a partnership with OURA with plans to expand its services into smart ring technology, a trending health-tracker device. The collaboration is aimed at revolutionizing metabolic health management by integrating DexCom's glucose biosensor data with the biometric insights provided by the Oura Ring. The companies will also co-market and cross-sell each other’s products. The first app integration resulting from the partnership is expected to be launched in the first half of 2025.In August, DexCom announced the availability of Stelo, the first over-the-counter CGM biosensor in the United States for people with type II diabetes who do not use insulin. The expansion in the underpenetrated Type 2 diabetes market should support DXCM’s top-line growth going forward.In June, DexCom announced the integration of its G6 CGM system with Insulet’s Omnipod 5 Automated Insulin Delivery System for Type 1 diabetes patients. The same month, the company announced the direct connectivity of the G7 CGM system with the Apple Watch. This added feature is now available to users in the United States, the U.K. and Ireland, with additional markets launching it soon.Positive Coverages: DexCom expanded its global coverage significantly in third-quarter 2024, unlocking new growth opportunities. Key milestones included the launch of DexCom ONE+ in France and national reimbursement for more than 600,000 eligible individuals, including those using basal insulin. In Japan, enhanced sales efforts and market access reached more than a million potential customers, fueling strong momentum. Across Europe, gradual reimbursement wins for intensive insulin and basal patients further solidified DexCom's presence. These coverage updates reflect a strategic focus on increasing accessibility for diabetes management solutions, enabling DexCom to serve a growing global population with innovative continuous glucose monitoring technologiesStrong Q3 Results: DXCM’s continued revenue growth buoy optimism. The revenue growth of 2% during the third quarter was driven by strong new patient performance and the expanded availability of its G7 and DexCom ONE+ product platforms. Although rising costs and expense led to decline in earnings, it was better than market consensus. Dexcom expects total revenues to be in the band of $4-$4.05 billion for 2024, implying organic growth of 11-13% year over year.Impressive contributions from the Sensor segment and domestic and international revenue growth are likely to be the key catalysts. The expansion of coverage for CGM systems during the quarter further supported growth. Additionally, the launch of the G7 and DexCom ONE+ in key markets, including Australia and France, along with accelerated patient uptake, supports Dexcom’s growth trajectory globally.DownsidesRebate Pressure: Despite these positives, DexCom faces challenges. Rebate pressures, with eligibility near 100%, weighed on U.S. revenues in the third quarter and remain a short-term headwind. The company also contends with channel mix shifts, as the retail pharmacy channel gains preference over DME, adversely impacting margins.Stiff Competition: Rising competition in the Type 1 diabetes market, particularly from pump-integrated CGM systems, adds pressure. Additionally, the leadership transition in the U.S. commercial team introduces potential risks to execution as DexCom navigates these dynamics. While challenges persist, DexCom’s strategic initiatives and innovation-driven approach position it well for sustained growth.DexCom, Inc. Price DexCom, Inc. price | DexCom, Inc. QuoteEstimate TrendDexCom witnessed a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for the year’s earnings per share improved from $1.69 to $1.71.The consensus mark for the company’s fourth-quarter revenues is pegged at $1.10 billion, indicating a 5.9% improvement from the year-ago quarter’s reported number. The consensus estimate for earnings is pinned at 52 cents per share, implying an improvement of 4% year over year.Stocks to ConsiderSome better-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and AxoGen AXGN.Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 49.4% compared with the industry’s 6.7% growth year to date.Accuray, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.ARAY’s shares have lost 32.2% against the industry’s 6.7% growth year to date.AxoGen, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 252% for 2025. It delivered a trailing four-quarter average earnings surprise of 91.11%.AXGN’s shares have risen 111% year to date compared with the industry’s 6.7% growth.Free Report: 5 Clean Energy Stocks with Massive UpsideEnergy is the backbone of our economy. It’s a multi-trillion dollar industry that has created some of the world’s largest and most profitable companies.Now state-of-the-art technology is paving the way for clean energy sources to overtake “old-fashioned” fossil fuels. Trillions of dollars are already pouring into clean energy initiatives, from solar power to hydrogen fuel cells.Emerging leaders from this space could be some of the most exciting stocks in your portfolio.Download Nuclear to Solar: 5 Stocks Powering the Future to see Zacks’ top picks free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Accuray Incorporated (ARAY): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis Report DexCom, Inc. (DXCM): Free Stock Analysis Report AxoGen, Inc. 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