Investors took Dexcom stock to the woodshed Friday despite the company's first-quarter beat and boosted sales guidance.
But that hiked sales guidance was light at the midpoint and Dexcom stock plummeted 9.9%, closing at 124.34. Shares easily undercut a recent buy point at 132.03 out of a flat base, MarketSurge chart analysis shows. Shares had closed in a buy zone before the earnings release.
William Blair analyst Margret Kaczor Andrew noted that the lion's share of Dexcom's first-quarter growth came from its international segment, while U.S. sales were largely in line with historical seasonal trends. Dexcom makes continuous glucose monitors, or CGMs. These body-worn devices help people with diabetes keep tabs on their blood sugar in real time — a critical component to managing the disease.
"While a less flashy quarter domestically than we have seen recently, which along with limited changes to guidance led the stock being indicated down 6% in the aftermarket, management commentary on the call supported our bullish outlook on the next two to four years," she said in a report.
Andrew kept her outperform rating on Dexcom stock.
Dexcom Stock: Solid Beat
In the first quarter, Dexcom's sales surged 24% to $921 million. Organically, sales climbed 25% year over year. That easily beat expectations for $910 million, according to FactSet.
Further, adjusted earnings came in at 32 cents per share, a nickel above forecasts, and nearly double the 17 cents a share the company reported in the year-earlier period.
Dexcom also raised the lower boundary of its guidance for the year, and now expects $4.2 billion to $4.35 billion in sales. The midpoint is slightly below Dexcom stock analysts' forecast for $4.33 billion.
The company also noted a record number of new patients started using Dexcom's CGMs during the first quarter and there's been "significant interest" in Stelo, Andrew said. Stelo, Dexcom's newest CGM, will launch this summer for patients with type 2 diabetes who don't require insulin treatment. The device will be available without a prescription, meaning it will likely see some uptake among non-diabetics.
"We believe these updates bode well for Dexcom to see market-leading top- and bottom-line growth this year and beyond, and would take advantage of any pullback in the stock given recent trends and arguably one of the most important device launches in its history," Andrew said.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
