Shares of DexCom Inc. DXCM rallied to a new 52-week high of $65.19 on Apr 9, eventually closing a tad bit lower at $65.00. This represents a strong one-year return of about 80.3%. The S&P 500 also jumped almost 14.1% during the same period.
We note that this Zacks Rank #3 (Hold) stock has a market cap of $5.04 billion and a long-term expected EPS growth rate of 32.5%.
Key Growth Catalysts
DexCom reported profit for the first time in its history in the fourth quarter of 2014. The company has a robust product pipeline with the latest launch of DexCom Share – the first FDA-approved mobile remote monitoring system – and the new software for its G4 Platinum CGM System. The company is riding high on the back of a number of FDA approvals received over the past few months.
DexCom expects product revenues in the range of $340 million to $360 million. Approximately 40% to 45% of this revenue is expected to be generated in the first half, while the remaining is likely to come in the back half, much similar to the 2014 trend.
First-quarter 2015 revenues are expected to be approximately 20% of full-year revenues. However, first-quarter results are expected to be negatively impacted by seasonality as well as the financial impact of the launch of Share Receiver upgrade program. DexCom expects product gross margin to be down sequentially in the first quarter, but margins are likely to return to normal over the course of 2015.
Estimate Revisions
The Zacks Consensus Estimate for 2015 increased by a penny to stand at $0.02 over the past 60 days, which reflects significant growth as compared with 30 cents of loss reported in 2014. Similarly, the consensus estimate for fiscal 2016 surged 14.3% (6 cents) to 48 cents over the same period.
Stocks to Consider
Better-ranked stocks in the sector are Inogen INGN, Abiomed ABMD and Luminex LMNX. While Inogen sports a Zacks Rank #1 (Strong Buy), Abiomed and Luminex carry a Zacks Rank #2 (Buy).
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