Dexcom Stock, A Top 2% Stock, Skids As Sales Growth Slows

Dexcom (DXCM) lagged the most bullish expectations for its adjusted earnings late Thursday, but offered an otherwise broad beat. Still, Dexcom stock skidded.

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On average, analysts polled by FactSet expected the diabetes devices giant to earn 15 cents a share, excluding some items. Dexcom’s profit beat that at 17 cents per share, though it missed the most bullish projections at 20 cents a share.

Sales climbed 18% to $741.5 million and easily topped forecasts for $720.7 million.

But in after-hours trading on today’s stock market, Dexcom stock tumbled 3.7% near 119. Shares are consolidating with a buy point at 125.65, according to MarketSmith.com.

Dexcom Stock: Sales Growth Slows

Dexcom has posted quarterly sales growth of 17% to 19% for four straight quarters now. But that has slowed from earlier growth of 25%-31%. The slowdown could make Dexcom stock investors nervous.

But the company says it’s still early in the continuous glucose monitor, or CGM, business. CGMs are body-worn devices that monitor a user’s blood sugar in real time. They can be paired with insulin pumps to help ease the management of diabetes.

CGMs have historically been used primarily in the type 1 diabetes market. In this genetic form of the disease, patients’ bodies don’t make their own insulin. So patients are reliant on insulin pumps or multiple daily injections. Type 2 diabetes is a progressive condition.

Now, the Centers for Medicare and Medicaid Services is covering a broader group of patients with the progressive condition. The decision on March 2 pushed Dexcom stock 9.5% higher.

Full-Year Guidance Raised

Dexcom also recently launched a new CGM dubbed G7 in the U.S.

In response to the strong demand and new CGM coverage, Dexcom raised its full-year outlook. Now the company expects $3.4 billion to $3.52 billion in sales. Dexcom stock analysts were projecting $1.06 in earnings per share and $3.47 billion in sales.

Three months ago, Dexcom forecast $3.35 billion to $3.49 billion in sales.

Dexcom stock has a nearly perfect IBD Digital Composite Rating of 98. This means shares rank in the leading 2% of all stocks in terms of fundamental and technical metrics.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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