6. DexCom Inc. (NASDAQ:DXCM)
Average Upside Potential: 33.65%
Number of Hedge Fund Holders: 64
DexCom Inc. (NASDAQ:DXCM) develops, manufactures, produces, and distributes continuous glucose monitoring systems for diabetes management. Its CGM (continuous glucose monitoring) systems use a small sensor that is inserted under the skin to continuously measure glucose levels and transmit the data to a compatible device, such as a smartphone or watch, allowing users to monitor their blood sugar trends, make informed decisions about insulin dosing, and improve overall diabetes management.
The company exceeded expectations with earnings per share of $0.43 in Q2 2024. Although revenue of $1 billion fell short of the estimated $1.04 billion, it still showed 15.26% year-over-year growth. International revenue grew 7%. Its continuous technological advancements in CGM and its increasing market share in the healthcare sector demonstrate its strength in a rapidly evolving industry.
Similar to Insulet, which offers insulin delivery systems, DexCom Inc.’s (NASDAQ:DXCM) devices enable round-the-clock glucose monitoring. This gives it a strong competitive advantage in a relatively stable market. However, the company’s reliance on disposable sensors (94% of revenue) and distributors (85% of H1 2024 revenue) exposes it to potential risks from competitors and supply chain disruptions. The launch of Stelo, its first over-the-counter nonprescription glucose biosensor, is a major catalyst for growth in Q2.
Despite facing competition from industry peers and concerns about market demand, the company’s innovative products and technology offer significant potential for growth. Its ability to differentiate its offerings and adapt to changing market conditions will be crucial for its future success.
The company offers significant potential for growth in the rapidly expanding diabetes market. However, recent challenges, including increased competition and concerns about GLP-1 drugs, have impacted its stock performance. Still, DexCom Inc. (NASDAQ:DXCM) remains a promising investment.
Ithaka US Growth Strategy stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its Q2 2024 investor letter:
“DexCom, Inc. (NASDAQ:DXCM is a medical device company focused on the design, development, and commercialization of continuous glucose monitoring (CGM) systems, primarily for people with diabetes. Diabetes is a chronic, life-threatening disease for which there is no known cure. DexCom’s CGM system is superior to traditional fi nger-stick tests because it provides users with continuous data (including glucose trends and time spent in hyper or hypoglycemia) versus a snapshot in time. Dexcom’s stock suffered despite a solid earnings announcement that beat Street expectations across the board. The fall in the stock price was likely due to missing elevated buy-side expectations following multiple quarters of accelerating fundamental growth.”
