BTIG Reiterates Buy Rating on DexCom (DXCM)

BTIG analyst Marie Thibault reiterated a Buy rating and $120.00 price target on DexCom (NASDAQ: DXCM).

The analyst comments "Dexcom reported $994.2M in Q3 revenue (+2% y/y rep., +3% y/y org.), $4M above the consensus estimate of $990M. Q3 adj. EPS was $0.45, two cents above consensus. DXCM missed Visible Alpha consensus' U.S. sales expectation by $19M, reporting $701.9M (-2% y/y) and beat by $22M on OUS sales of $292.3M (+12% y/y rep.). Despite the light U.S. result, management commentary was upbeat, highlighting a record level of new patient starts, progress and momentum on commercial execution efforts, stabilizing share in the DME channel in September, and confidence in returning to higher growth. OUS sales accelerated, with help from added traction in Japan, and we expect recent reimbursement wins to help spur adoption in Q4 and 2025. 2024 guidance was maintained with a sales outlook of $4.0B-$4.05B (cons. $4.014B); the margin outlook was maintained as well. This implies Q4 guidance of $1.080B-$1.130B (cons. $1.102B), which represents ~4-9% y/y org. growth. DXCM reiterated that it remains on track to achieve $4.6B in revenue in 2025, at the low end of the LRP; we note this assumes stabilized share in the DME channel, not share gains. DXCM announced Chief Commercial Officer Teri Lawver is retiring at the end of the year and CEO Kevin Sayer will lead the commercial organization during the search process for a replacement CCO. We do not think this will slow the positive U.S. salesforce momentum. While DXCM did not reconfirm the ~$40M in Stelo sales for 2024, feedback is reportedly positive, with >70,000 different people using Stelo in the first two months of launch and half of customers signing up for subscriptions. New selling channels that include wellness clinics and clinicians, DXCM's DME partners, as well as continued DTC spend and the holiday season, are all likely to be impactful to Stelo sales in Q4. Q3 margins were healthy and slightly better than expected. As another plus, the co. submitted the 15-day wear G7 to the FDA after Q3; we expect longer wear will help DXCM compete in the DME channel and improve margins. We think this Q3 result and commentary demonstrate DXCM's issues have been related to commercial execution, not structural hurdles. Even if DXCM shares are a bit weak in Friday trading, we think the positive updates for Q4 and 2025 combined with relatively low investor expectations may allow DXCM shares to move higher into year-end. We think DXCM deserves a premium valuation, since it is more profitable than most of its peers, retains a strong position in a market duopoly, and has a path back to higher growth. We maintain a $120 PT based on 9x EV/Sales on our 12-24 mo. sales estimate."

For an analyst ratings summary and ratings history on DexCom click here. For more ratings news on DexCom click here.

Shares of DexCom closed at $74.85 yesterday.

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