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 31.2% in the past six months against the industry’s 0.6% growth. The S&P 500 Index has jumped 3.8% in the same time frame.DXCM, a renowned medical device company and provider of continuous glucose monitoring (CGM) systems, has a market capitalization of $30.37 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, with the average surprise being 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, DXCM announced the launch of a proprietary Generative AI (GenAI) platform, making Dexcom the first Continuous Glucose Monitoring (CGM) manufacturer to integrate GenAI into glucose biosensing technology. In November, 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.Estimate TrendDexCom witnessed a stable estimate revision trend for 2025. In the past 60 days, the Zacks Consensus Estimate for the year’s earnings per share was pinned at $2.03.The consensus mark for the company’s first-quarter revenues is pegged at $1.02 billion, indicating an 11.3% improvement from the year-ago quarter’s reported number. The consensus estimate for earnings is pinned at 37 cents per share, implying an improvement of 15.6% year over year.DexCom, Inc. Price DexCom, Inc. price | DexCom, Inc. QuoteStocks to ConsiderSome better-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and Abbott Laboratories ABT.Masimo, carrying a Zacks Rank #2 at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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 31.7% against the industry’s 1% decline in the past six months.Accuray, carrying a Zacks Rank #2 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 gained 8.8% against the industry’s 1% decline in the past six months.Abbott, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 10% for 2025. It delivered a trailing four-quarter average earnings surprise of 1.64%.ABT’s shares have risen 8.5% in the past six months compared with the industry’s 7.2% growth.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 Abbott Laboratories (ABT): Free Stock Analysis Report Accuray Incorporated (ARAY): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis Report DexCom, Inc. 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