Dexcom (DXCM) stock jumped about 8% on Friday, at the time of writing, as activist investor Elliott Investment Management took a stake in the maker of continuous glucose monitoring (CGM) devices and reached a settlement to add two new independent directors to the board. The company announced the settlement ahead of its Investor Day held yesterday. Wall Street analysts reacted positively to the company’s financial goals and other updates provided at the event.
Meet Samuel – Your Personal Investing Prophet
- Start a conversation with TipRanks’ trusted, data-backed investment intelligence
- Ask Samuel about stocks, your portfolio, or the market and get instant, personalized insights in seconds
Dexcom Strikes a Settlement with Activist Elliott
Dexcom has agreed to work with Elliott to appoint two new independent directors to the board with expertise in medtech and “lean” operations. Marc Steinberg, Partner at Elliott, said that the activist investor is one of DXCM’s largest investors, as it believes that the CGM market is significantly underpenetrated and the company is well-positioned to deliver continued double-digit growth. Elliott is also confident about Dexcom’s potential to enhance margins and boost earnings.
Meanwhile, Dexcom announced that its Technology Committee on the board will now become the Operations and Innovation Committee. The renamed committee will help enhance the board’s focus on the company’s crucial expansion efforts and its technical roadmap.
The activist investor’s push is expected to help Dexcom revive its growth story. As of Thursday’s closing, DXCM stock was down about 33% over a one-year period amid pressure on its topline.
Analysts Encouraged by Dexcom’s Updates
Following the Investor Day updates, Piper Sandler analyst Matthew O’Brien reiterated a Buy rating on DXCM stock with a price target of $75, saying “DXCM is our favorite large-cap idea and we encourage investors to own the name at these levels.” The analyst highlighted that management’s financial guidance looks “compelling,” especially DXCM’s commitment to use at least 50% of its annual free cash flow for share repurchases.
O’Brien expects Dexcom to be one of the “faster top- and bottom-line growers” in the medtech space in the years ahead. He is very optimistic about the company’s G8 product, which is expected to be rolled out in about 18 months. O’Brien is also impressed by the company’s pipeline and the involvement of activist investor Elliott.
Likewise, Truist Securities analyst Richard Newitter reiterated a Buy rating on DXCM stock with a price target of $80. The 5-star analyst noted that Dexcom’s long-range plan through 2030 looks very achievable and could even be exceeded. Newitter believes that Dexcom has one of the “stronger” growth profiles in the large-cap medtech space, even under “base” case assumptions.
Additionally, Newitter believes that DXCM’s valuation doesn’t fully reflect its growth outlook, including more than 10% revenue growth and a high-teens EPS (earnings per share) profile. The analyst added that DXCM remains a preferred large-cap pick due to a potential increase in the total addressable market (TAM) from Type 2 Non-Insulin Treated (NIT) coverage expansion over the next 6-12 months, as well as the launch of its new G8 product cycle. He views the announcement of share buybacks, board changes, and Elliott’s involvement positively.
Is DXCM a Good Stock to Buy?
Overall, Dexcom stock scores a Strong Buy consensus rating based on 19 Buys, one Hold, and one Sell rating. The average DXCM stock price target of $80.10 indicates about 29% upside potential.
