BMO Capital Starts DexCom (DXCM) at Outperform
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BMO Capital initiates coverage on DexCom (NASDAQ: DXCM) with a Outperform rating and a price target of $112.00.
Analyst Joanne Wuensch commented, "DexCom has revolutionized the treatment of diabetes with its continuous glucose monitoring (CGM) systems that solve many of the limitations of traditional finger stick testing by providing a “continuous” series of glucose readings, displaying a trend line graph and allowing real-time alerts and alarms."
She added, "DXCM shares are not cheap, nor should they be, trading at 9.6x 2017E EV/ revenue versus the peer group’s 7.0x average. With an estimated growth rate of 38% versus the peer group average of 25%, the company has consistently delivered revenue, and we believe that it has a long runway ahead of it. Admittedly, the multiple sounds high, but it is actually hovering at its five-year average of 9.9x (the range is wide - 3.7-16.7x). Our price target is based on: 1) 11.5x 2017E EV/revenue ($111/share); 2) 9.5x 2018E EV/revenue, discounted back one year ($115); and 3) a DCF analysis ($112)."
Shares of DexCom closed at $92.75 yesterday.
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