Dexcom (DXCM) stock witnessed a significant drop of about 37% in the after-hours trading session yesterday. The decline came after DXCM reported mixed second-quarter results and lowered its full-year revenue outlook.
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DXCM offers glucose monitoring systems for diabetes management (for a thorough assessment of the stock, go to TipRanks’ Stock Analysis page).
DXCM: Q2 Highlights
Dexcom’s bottom line increased 26.5% to $0.43 per share and surpassed analyst expectations of $0.39 per share. Further, the company’s revenue increased by 15% to $1 billion. However, it missed the consensus estimate of $1.04 billion.
The company noted that lower revenue per user and an unexpected decline in new patient numbers impacted its performance. Dexcom said it remains committed to addressing these issues and regaining investor confidence.
Interestingly, analysts’ bearish views on DXCM stock, as shown in TipRanks’ Bulls Say, Bears Say tool, had suggested that the company’s revenue might disappoint in Q2.
Lower-Than-Expected Q3 and 2024 Outlook
Dexcom lowered its full-year outlook to between $4 billion and $4.05 billion, compared to the previous range of $4.20 billion to $4.35 billion. Further, the consensus estimate is pegged at $4.33 billion.
The company attributed this decline to a slowdown in new patient acquisitions and weaker-than-expected international performance.
For the third quarter of 2024, revenue is expected to be in the range of $975 million to $1 billion, below analysts’ expectations of $1.15 billion.
Capital Deployment
Based on its strong cash position, consistent free cash flow generation, and ongoing growth opportunities, the company authorized a share buyback of up to $750 million.
New Product Launch
Dexcom announced that its new over-the-counter CGM, Stelo, which received FDA clearance in March, will be launched in August. Stelo targets Type 2 diabetes patients who do not use insulin.
This new product launch is expected to support the company’s top-line growth in the third quarter to some extent.
Is DXCM a Good Stock to Buy?
Overall, Wall Street is optimistic about the stock. It has a Strong Buy consensus rating based on 10 Buys and three Holds. The analysts’ average price target on Dexcom stock is $148.15, implying a 37.37% upside potential from current levels. Year-to-date, the stock is down 13.1%.
It’s important to note that analysts’ perspectives on DXCM may change following the disappointing Q2 earnings report.
