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 strong fourth-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 20.5% year to date compared with the industry’s 4.4% decline. The S&P 500 Index has declined 4.1% in the same time frame.DXCM, a renowned medical device company and provider of continuous glucose monitoring (CGM) systems, has a market capitalization of $26.72 billion. It projects a 19.2% growth rate over the next five years and anticipates maintaining a strong performance going forward.Image Source: Zacks Investment ResearchDexCom’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed in one, the average surprise being 5.86%.Let’s delve deeper.Strong Product Demand: We are upbeat about DexCom's continued strength in CGM products.In the fourth quarter, Dexcom’s G7 system continued its robust momentum. Accelerated conversion of the installed base for G7 manufcaturing is driving strong revenue performance and improving gross margins. Both U.S. and international markets benefited from enhanced reimbursement and access wins, underscoring the system’s clinical value. Dexcom advanced the launch of Stelo, its over-the-counter product for non-insulin type 2 diabetes, pre-diabetes, and health-conscious consumers. Over 140,000 users adopted Stelo within the first four months, indicating strong market interest.In Europe, Dexcom’s One+ system performed strongly. The company finalized basal coverage for One+ in France during the fourth quarter. These trends underscore DexCom’s growing market presence and the effectiveness of its innovative solutions in diabetes management and metabolic health.New Product Launch: Dexcom plans to launch a 15-day G7 sensor in the second half of 2025 that will likely bolster margins and user experience. Additionally, efforts are underway to integrate AI-driven analytics, which deliver personalized insights and support improved patient care. Dexcom is actively developing its next-generation sensor, G8, as its new hardware platform across its product portfolio. Building on the insights gained from G7, G8 will be a smaller, more advanced wearable that incorporates multi-analyte capabilities, enhancing its diagnostic potential.In December, DXCM announced the launch of a proprietary Generative AI (GenAI) platform, making it 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.Positive Coverages: Reimbursement expansion is also playing a crucial role in DexCom’s growth, with insurance coverage extending beyond insulin users. As of January 2025, two of the three largest pharmacy benefit managers (PBMs) in the United States covered DexCom continuous glucose monitors (CGMs) for all diabetes patients, granting access to over 5 million people with type 2 diabetes who are not on insulin. This represents a significant advancement from the previous milestone in basal insulin reimbursement. DexCom is actively working to expand coverage for the remaining 20 million individuals in this category, further strengthening its market position.Strong Q4 Results: DXCM delivered a robust performance in 2024, fueled by multiple strategic initiatives, including an expanded sales force, new product launches and increased global reimbursement coverage. The company broadened its commercial reach, enhancing sales productivity and strengthening its position in the biosensing market. This led to a significant increase in DXCM’s active customer base, reaching more than 2.8 million users worldwide (up 25% from the 2023 level).A major highlight of 2024 was the company’s ability to grow its active customer and prescriber base. It added more than 50,000 new U.S. prescribers, particularly in primary care and emerging care points, such as Maternal-Fetal Medicine. Stelo has been a notable contributor to growth, particularly in the non-insulin and health-conscious consumer segments.DexCom’s international revenues are driven by expansion in markets, such as France and New Zealand, where broader reimbursement coverage was achieved. France, in particular, remains a key growth market, with DexCom ONE+ gaining traction. The company is also focusing on expanding basal insulin coverage across other markets, with early successes in Germany, Canada and Australia, and a growing presence in Japan.DexCom’s strong revenue growth projection for 2025, driven by continued market expansion, broader access wins and advancements in its CGM technology, looks promising.DownsidesRebate Pressure: In the fourth quarter, Dexcom encountered notable rebate pressure in the U.S. market, which negatively impacted its revenue growth despite strong demand and improved sales force productivity. The rebate eligibility challenges resulted in a lower growth rate as reported revenue figures reflected these headwinds. Management anticipates that this pressure will ease in the first quarter and become minimal throughout 2025 as efforts to stabilize the rebate channel take effect and support a more robust performance.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, the company’s strategic initiatives and innovation-driven approach position it well for sustained growth.Estimate TrendDexCom has witnessed a stable estimate revision trend for 2025. In the past 30 days, the Zacks Consensus Estimate for 2025 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 a 10.3% improvement from the year-ago quarter’s reported number. The consensus estimate for earnings is pinned at 33 cents per share, implying an improvement of 3.1% 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, Cencora, Inc. COR and Boston Scientific Corporation BSX. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Masimo, sporting a Zacks Rank #1 at present, has an estimated growth rate of 20% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.41%.Masimo’s shares have gained 1.4% against the industry’s 4.5% decline so far this year.Cencora, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.1%. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.9%.Cencora’s shares have gained 23.5% compared with the industry’s 4.2% growth year to date.Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.Boston Scientific’s shares have rallied 13.4% compared with the industry’s 7.6% growth so far this year.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 +23.9% 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 Boston Scientific Corporation (BSX): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis Report DexCom, Inc. (DXCM): Free Stock Analysis Report Cencora, Inc. (COR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks