We remain Neutral on
). Its first-quarter 2012 loss per share of 21 cents exceeded the
Zacks Consensus Estimate. Losses widened year over year despite
solid double-digit revenue growth.
Sales increased sharply 41.8% year over year to $20.1 million in
the first quarter, narrowly beating the Zacks Consensus Estimate.
Product sales jumped 42% to $18.6 million while development grant
and other revenues were up 42.7% to $1.5 million in the reported
The diabetes market is large and growing. An important component
of effective diabetes management is frequent monitoring of blood
glucose levels. DexCom's product has a comparative advantage in
terms of both patient convenience and quality of data generated
vis-à-vis traditional diagnostic tests.
We believe DexCom is poised to gain a share of the glucose
monitoring market driven by sustained product development
initiatives, collaborations, favorable reimbursement and increased
need for continuous glucose monitoring. Increased awareness and
acceptance of the need for continuous glucose monitoring and more
favorable reimbursement coverage should help drive sales for
Other potential catalysts include the FDA approval and launch of
new products under the company's collaborative agreements with
several companies including Insulet Corporation. The company
revealed that it filed for a pre-market approval (PMA) for its Gen4
sensor in the first quarter of 2012.
In addition to upgrading and enhancing the functions of existing
products, DexCom has also been active on the collaboration front,
through which it is looking to leverage its technology with its
collaborator's product offerings.
We also feel that the company's move to buy healthcare IT
company SweetSpot Diabetes may allow it to compete more effectively
) through better data management systems.
However, competition in the glucose monitoring market is fierce.
Moreover, DexCom has incurred losses since inception and its
efforts are made more difficult by a stringent regulatory
environment. We are currently Neutral on the stock, supported by a
short-term Zacks #3 Rank (Hold).
DEXCOM INC (DXCM): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
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