DexCom (DXCM) to Report Q2 Earnings: What's in the Cards?

DexCom, Inc. DXCM is scheduled to release second-quarter 2020 results on Jul 28, after the closing bell. In the last reported quarter, the company delivered earnings surprise of 340%. Further, it surpassed estimates in each of the trailing four quarters, the average surprise being 218.2%.

Q2 Estimates

Currently, the Zacks Consensus Estimate for second-quarter revenues is pegged at $406.1 million, suggesting growth of 20.7% from the year-ago reported number. The consensus estimate for earnings is pegged at 28 cents per share, indicating an improvement of 250% from the prior-year quarter.

Factors to Note

DexCom’s second-quarter top line is likely to reflect increase in volumes, driven by new patients across all channels, and rising global awareness regarding the benefits of its real-time Continuous Glucose Monitoring (CGM).

Notably, the company’s FDA-cleared CGM system — the DexCom G4 Platinum — has been driving performance.

Dexcom’s Insulet and Lilly diabetes management products have also been progressing well. The company’s commercial agreement with Eli Lilly was officially signed in December 2019. This highlighted a significant step toward bringing their system to market with G6, which will initially focus on a smart pen offering.

DexCom, Inc. Price and EPS Surprise

DexCom, Inc. Price and EPS Surprise

DexCom, Inc. price-eps-surprise | DexCom, Inc. Quote

In January 2020, Tandem Diabetes launched its latest integrated pump offering – the Control-IQ system – integrating the DexCom G6 sensor and its type zero algorithm to automated insulin delivery. Interestingly, this is the first integrated system to provide automated correction boluses based on the customer CGM ratings in its AP algorithm.

Per the first-quarter 2020earnings call the FDA was quick to enable the use of DexCom CGM in the hospital setting and other healthcare facilities to lend support to COVID-19 healthcare related efforts, thereby further boosting demand for the product.

In the last reported quarter, the company announced that it continues to advance the regulatory pathway for use of CGM in pregnancy, obtaining CE Mark for wear on the back of the arm.

These developments are anticipated to have positively impacted the company’s overall performance in the to-be-reported quarter.

DexCom has significant opportunity to capitalize on international markets driven by the demographic trends and lifestyle in countries outside the United States and Europe. Per management, international growth remains strong and presents lucrative prospects on the back of improving global access and awareness. This might have contributed to the second-quarter international revenues.

Improved operational discipline may have contributed to the company’s second-quarter operating margin.

However, increase in operating expenses and intense competition is likely to have weighed on the second-quarter performance.

What Our Quantitative Model Suggests

Per our proven model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is the case here as you will see.

Earnings ESP: DexCom has an Earnings ESP of +83.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: DexCom carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are some other medical stocks worth considering as these too have the right combination of elements to post an earnings beat this quarter.

Integra LifeSciences Holdings Corporation IART has an Earnings ESP of +20.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exact Sciences Corporation EXAS has an Earnings ESP of +6.69% and a Zacks Rank of 2.

Hologic, Inc. HOLX has an Earnings ESP of +12.27% and a Zacks Rank of 3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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