Dexcom, a company specializing in glucose monitoring devices, has overcome what some perceived as an existential threat, and its recovery trajectory appears promising. The stock has recently surpassed the buy point of a cup base, further buoyed by an upgrade in its Relative Strength (RS) Rating from 77 to 85. This upgrade places Dexcom in the top 15% of all stocks for price performance over the last 52 weeks, a significant development as research indicates that market leaders typically exhibit an RS Rating of 80 or higher in the early stages of their upward moves.
One potential challenge Dexcom faced was the introduction of new weight-loss drugs by pharmaceutical giants like Eli Lilly and Novo Nordisk, prompting speculation about the potential decline in demand for glucose monitoring devices. However, analysts assert that the rollout of these drugs is in its nascent stage and is unlikely to significantly diminish the need for such devices, as they remain integral to diabetes care. Moreover, there’s a growing trend of non-diabetic individuals utilizing these devices for glucose monitoring as part of their efforts to manage weight and improve fitness.
Dexcom’s continuous innovation in releasing new versions of its devices, such as the Dexcom G7 and iLet Bionic Pancreas, which integrates with an insulin pump and automatically adjusts insulin levels based on Dexcom monitoring, underscores its commitment to staying ahead in the market. Furthermore, its robust financial metrics, including a near-best Earnings Per Share (EPS) Rating of 98 out of 99, a Composite Rating of 94, and an A SMR Rating (sales + profit margins + return on equity), position Dexcom as a standout performer in the medical products industry.
Institutional investor interest in Dexcom remains strong, indicated by its B Accumulation/Distribution Rating, suggesting significant buying activity from mutual funds and other large investors. Despite its recent surge in stock price, Dexcom’s continued growth trajectory is underscored by its solid financial performance, with a notable 47% earnings growth and 27% sales growth reported in its most recent quarter.
As Dexcom stock trades at around $136, it’s considered extended and out of buy range after clearing a key buy point in a first-stage flat base. Investors are advised to monitor the stock for potential follow-on buying opportunities, such as a formation of a new pattern or a pullback to key technical levels. With its next earnings report expected around April 25, Dexcom remains a compelling prospect in the medical-products industry, holding the No. 2 rank among its peers.