DexCom
(
DXCM
), a player in the glucose monitoring market, reported
fourth-quarter 2011 loss per share of 18 cents, higher than both
the Zacks Consensus Estimate of a loss of 17 cents and the year-ago
loss of 16 cents per share. Net loss for the quarter increased
24.9% year over year to $12.3 million.
For fiscal 2011, loss per share of 68 cents was also above the
Zacks Consensus Estimate of a loss of 67 cents but much lower than
the year-ago loss of 97 cents per share.
Revenues
Sales increased sharply 43% year over year to $22.4 million in
the fourth quarter, beating the Zacks Consensus Estimate of $22
million. Revenue was $76.3 million in fiscal 2011, up 57% year over
year, surpassing the Zacks Consensus Estimate of $75 million.
Product sales climbed 54% to $20.9 million while development
grant and other revenues were down 27% to $1.5 million in the
reported quarter.
Margins and Expenses
Gross margin improved to 47.7% in the fourth quarter from 44.7%
a year ago. Cost of sales moved up 35.6% year over year to $11.7
million on account of higher cost of product sales. Operating
expenses increased 36.1% year over year to $23 million on account
of higher R&D spending and selling, general and administrative
expenses, which grew 33.8% and 37.7%, respectively, in the
quarter.
Balance Sheet
At the end of the quarter, DexCom had cash and short-term
marketable securities of $81.9 million, up 74% y/y.
Our Take
We believe DexCom is poised to gain a major share of the glucose
monitoring market, driven by sustained product development
initiatives, collaborations, favorable reimbursement coverage and
increased need for continuous glucose monitoring.
However, we note that competition in the glucose monitoring
market is intense and DexCom faces stiff challenges from much
larger players such as
Johnson & Johnson
(
JNJ
),
Medtronic
(
MDT
) and
Abbott Labs
(
ABT
). Moreover, the company has incurred losses since inception and is
exposed to a stricter regulatory environment. Our Neutral
recommendation is supported by a short-term Zacks #3 Rank
(Hold).
ABBOTT LABS (
ABT
): Free Stock Analysis Report
DEXCOM INC (
DXCM
): Free Stock Analysis Report
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
MEDTRONIC (
MDT
): Free Stock Analysis Report
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