Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

7. DexCom, Inc. (NASDAQ:DXCM)

Consensus Long-Term EPS Growth Estimate: 30%

Number of Hedge Fund Holders: 64

DexCom, Inc. (NASDAQ:DXCM) is a medical device manufacturer that caters to the needs of diabetics. Its products enable round-the-clock monitoring of insulin levels to ensure that patients are able to take their insulin on time. Since DexCom, Inc. (NASDAQ:DXCM) is one of the few companies that sells such products, it enjoys a large moat in its niche. Additionally, unless medical science discovers a cure for diabetes, the firm is also guaranteed a strong base of customers that it can help. Yet, on the flip side, since 94% of DexCom, Inc. (NASDAQ:DXCM)’s revenue comes from its sensors, the firm has to be on its toes to continually innovate and maintain robust market penetration. Failing to do either risks opening its bread-and-butter market to competitors, which can deal a sharp blow to finances. DexCom, Inc. (NASDAQ:DXCM) also relies to a large extent on distributors to ship its products. As of H1 2024, 85% of the firm’s revenue came via distributors which means that it has to carefully monitor channel inventory and maintain key partnerships.

Artisan Partners mentioned DexCom, Inc. (NASDAQ:DXCM) in its Q2 2024 investor letter. Here is what the fund said:

“Dexcom detracted from performance in the quarter as the stock price gave back all the strong gains from the first quarter of this year. The company reported strong first quarter earnings, beating consensus estimates for the top and bottom lines, highlighted by 25% organic revenue growth. Additionally, it raised the low end of full-year revenue guidance based on the strong start to the year, with record new patient starts. Dexcom is launching an over-the-counter continuous glucose monitoring device set to target the over 25 million Type 2 diabetes patients who are not dependent on insulin. Furthermore, the medical device company recently expanded its salesforce to better address the ~200K primary care physicians in the United States. We see several catalysts going forward, and the stock is trading at a discount to historical valuation metrics.”