When a stock is off nearly 40% in 18 months, most people stop paying attention. But sometimes that’s exactly when you should start.
That’s the case this stock, which we see as a leader in continuous glucose monitoring for diabetes patients.
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*Examples that we provide of share price increases pertaining to a particular Issuer from one referenced date to another represent an arbitrarily chosen time period and are no indication whatsoever of future stock prices for that Issuer and are of no predictive value. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT stock recommendations or constitute an offer or sale of the referenced securities.
Strategic Positioning
DexCom (NASDAQ: DXCM) built its business on a simple idea, to make life easier for people with diabetes.
Its CGM devices track blood sugar in real time without the constant finger pricks of old-school meters.
Readings every few minutes give patients a better view of how food, activity, or medication impact their glucose levels.
That insight can be life-changing, and it explains why adoption has been climbing for a decade.
The company is one of two dominant players globally, alongside Abbott, and it’s held onto its leadership through innovation.
Newer devices like the G7 are smaller, more accurate, and easier to use.
More importantly, the launch of Stelo, an over-the-counter option for non-insulin patients, opened up a whole new slice of the market.
That’s a big deal when hundreds of millions of diabetics worldwide still don’t use any CGM at all.
Action: If you’re looking for exposure to healthcare tech with a defensive bent, DexCom deserves a spot on your radar. |
Recent Momentum
DexCom’s last quarter showed why the underlying business still works. Revenue was up 15% year over year to about $1.2 billion, and adjusted earnings beat expectations at $0.48 per share.
Cash flow improved, and the company’s global footprint, with facilities in the U.S., Malaysia, and now Ireland, keeps manufacturing diversified.
The headlines haven’t been perfect. Rebates tied to the G7 rollout weighed on results in 2024, and tariffs could trim operating profits by about half a percentage point this year.
But those are speed bumps, not permanent roadblocks.
Insurance coverage for CGMs continues to expand in the U.S. and abroad, and adoption among non-insulin patients could add millions of new users over time.
Wall Street has noticed, even if the stock hasn’t responded yet.
Argus recently initiated coverage with a Buy and a $100 target, and other firms have price targets north of $100 as well.
The consensus view is that execution is back on track, even if investors remain cautious in the short run.
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Why These Levels are Enticing
Owning DexCom here is a bet on three things:
Massive white space: Roughly half a billion adults live with diabetes worldwide, yet only about 1% use CGMs.
Even in advanced markets like the U.S., millions of eligible patients still haven’t adopted the technology.Expanding addressable market: With Stelo and future innovations, DexCom is pushing into non-insulin populations and OTC markets, broadening its base beyond its core.
Sticky, essential product: Once patients and doctors rely on CGMs, they don’t switch back. That creates recurring demand and predictable cash flow, even when markets get rough.
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Valuation Check
At around $68, DexCom trades at about 49x earnings. That’s not cheap, but healthcare growth stocks rarely are.
The more relevant lens is cash generation: free cash flow margins have expanded by nearly nine points over the past five years, giving the company room to invest in new products while still building a cushion.
Compared to Abbott, DexCom carries a premium multiple, but its faster growth and expanding market justify it.
Analysts’ price targets cluster between $83 and $115, which would imply 20–60% upside from here if execution continues.
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88% margins
43,000 users
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*Examples that we provide of share price increases pertaining to a particular Issuer from one referenced date to another represent an arbitrarily chosen time period and are no indication whatsoever of future stock prices for that Issuer and are of no predictive value. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT stock recommendations or constitute an offer or sale of the referenced securities.
Catalysts to Watch
Insurance coverage: Any expansion of Medicare or private reimbursement for CGMs could unlock millions of new users.
Product launches: Uptake of Stelo and updates to the G7 platform.
Geographic expansion: New operations in Europe and emerging markets.
Margins: Cost discipline and scaling could push operating margins higher, especially once rebates fade.
Policy risks: Monitoring tariff developments and healthcare reimbursement trends.
Risks
Here are some things to watch out for
Tariffs could pressure margins, though the impact looks modest.
Competition from Abbott remains fierce, and pricing pressure could build.
Adoption curve in new markets may take longer than expected, especially outside developed economies.
High multiple leaves little room for error. Another stumble like the rebate episode could trigger another selloff.
Healthcare policy shifts, particularly around drug and device reimbursement, can always change the math quickly.
Final Take
DexCom isn’t a flashy AI stock or a speculative biotech moonshot. It’s a steady operator in a critical healthcare niche that just hit a rough patch.
The fundamentals of rising adoption, new product lines, and expanding global coverage all point to a much larger business five to ten years from now.
With shares down sharply and sentiment muted, the risk/reward has improved.
If you want exposure to healthcare growth without betting on unproven science, DexCom is a solid candidate.
Buy some now, keep cash ready to add on dips, and let time and patient adoption do the heavy lifting.
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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