On Sep 27, we reiterated our Neutral recommendation on
). The medical device company focuses on the development of
continuous glucose monitoring systems but remains a loss-making
entity despite soaring revenues. However, we are impressed by its
better than expected results.
Why the Retention?
On Aug 7, DexCom reported a narrower loss of $1.1 million or 2
cents per share in the second quarter of 2013 compared with a
loss of $14.7 million or 21 cents in the year-ago quarter, as
well as the Zacks Consensus Estimate of a loss of 16 cents per
share. The company's total revenues soared 53.0% to $35.8
million, also exceeding the Zacks Consensus Estimate of $31.0
Following the earnings release, the Zacks Consensus Estimate for
2013 inched down marginally by 1.9% to 52 cents per share, over
the last 30 days. However, the estimate for 2014 remained
unchanged at 20 cents over the same period. Currently, the stock
has a Zacks Rank #3 (Hold).
Going forward, the new U.S. Food and Drug Administration
(FDA)-cleared G4 Platinum and international expansion are
expected to accelerate growth. Increased awareness of the need
for continuous glucose monitoring, new products and data
supporting blood glucose monitoring should also help drive sales.
In addition, DexCom has also been active on the collaboration
front in order to enhance the functions of existing products. Its
business fundamentals rely on a recurring revenue base.
Nevertheless, competition in the glucose monitoring market
continues to be fierce. Reimbursement risks and a stringent
regulatory environment also pose potential challenges for DXCM in
the near term.
Other Stocks to Consider
While we remain on the sidelines regarding DexCom, medical
instruments stocks that warrant a look include
). All these stocks carry a Zacks Rank #2 (Buy).
CYNOSURE INC-A (CYNO): Free Stock Analysis
DEXCOM INC (DXCM): Free Stock Analysis Report
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LUMINEX CORP (LMNX): Free Stock Analysis
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