DexCom (DXCM) stock plunged over 16% in after-hours trading yesterday, despite beating analysts’ estimates for the third quarter of Fiscal 2024. The continuous glucose monitoring (CGM) system maker reported adjusted earnings of $0.45 per share, which reflected a 10% year-over-year decline but exceeded the consensus of $0.43 per share. Additionally, revenue rose nearly 2% year-over-year to $994.2 million, also beating the consensus of $990.71 million.
Importantly, investors seemed to be daunted by DexCom’s slowing U.S. sales numbers and mild revenue expectations for the future. The company even faces a class action lawsuit alleging that it misled investors regarding revenue expectations for Fiscal 2024.
Other Updates from Dexcom’s Q3 Results
In Q3, DexCom’s U.S. sales fell 2%, while International sales jumped 12% compared to the prior year period. The company reiterated its FY24 revenue guidance of $4 to $4.05 billion, after previously slashing it during the Q2 FY24 results.
Interestingly, DexCom has outpaced analysts’ expectations in all the past eight consecutive quarters. The company even repurchased $750 million worth of common shares during Q3 in line with its strategy.
The company is making strides in the CGM market with its new product launches and trying to captivate more customers. In Q3, DexCom launched Stelo in the U.S., a first-of-its-kind over-the-counter glucose biosensor for adults with prediabetes and type 2 diabetes who are not on insulin.
Furthermore, the company launched its advanced DexCom G7 products in Australia and DexCom ONE+ in France. Meanwhile, its 15-day DexCom G7 product is submitted to the U.S. FDA (Food and Drug Administration) for review.
Finally, DexCom announced that Executive VP and Chief Commercial Officer Teri Lawver will retire from her post at year end. She will aid in the smooth transitioning of the role while the company searches for a suitable substitute.
Analysts’ Initial Thoughts on DexCom’s Q3 Print
Following the results, TD Cowen analyst Josh Jennings noted that although DexCom’s results were just modestly ahead of expectations, he was impressed by management’s commentary. Management mentioned that the U.S. market headwinds had probably peaked in Q3 and could ease going forward. At the same time, the launch of Stelo and the FDA submission of the 15-day G7 could act as major catalysts for DexCom in the near future.
Jennings reiterated a Buy rating on DXCM stock with a price target of $100, implying 33.6% upside potential from current levels.
Likewise, Marie Thibault of BTIG was encouraged by DexCom’s overall Q3 beat. She noted that DexCom maintained the FY24 guidance, and despite the softening U.S. sales there were numerous positives from management that project a return to higher growth in 2025.
Thibault also maintained a Buy rating and $120 price target on DexCom stock. Thibault has the Street-high price target on DXCM, suggesting 60.3% upside potential from current levels.
Is DXCM a Good Stock to Buy?
On TipRanks, DXCM stock has a Strong Buy consensus rating based on 12 Buys versus four Hold ratings. The average DexCom price target of $96.19 implies 28.5% upside potential from current levels. Meanwhile, DXCM shares have lost 39.7% so far this year.
