Dexcom faced down what some thought was an existential threat. The prognosis is good; it's recovering nicely. Dexcom stock just topped the buy point of a cup base and it got an upgrade for its Relative Strength (RS) Rating, from 77 to 85.
Some market watchers thought the recent rollout of new weight-loss drugs by Eli Lilly, Novo Nordisk and others might negate the need for glucose monitoring devices. Those monitoring devices are currently an important part of care for diabetes patients. The reasoning was: If weight-loss drugs work well then the need for glucose monitoring goes away.
That hasn't been the case.
Dexcom Stock Gaining Amid Rising Sales
For one thing, Dexcom continues to release new versions of its devices including the Dexcom G7, which includes an insulin pump and iLet Bionic Pancreas, which automatically adjusts the amount of insulin needed based on feedback from Dexcom monitoring.
Further, the rollout of new weight-reduction pills is just at the beginning stage and hasn't significantly reduced diabetes cases. Analysts say those pills may never negate the need for glucose monitoring devices. Some non-diabetic people are starting to use them to monitor their glucose as they work to reduce their weight and get in shape.
The upgraded 85 RS Rating for Dexcom stock means it's in the top 15% of all stocks for price performance over the last 52 weeks. It's a significant change because market research shows that the market's biggest winners typically have an 80 or better RS Rating in the early stages of their moves.
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Among its other key ratings Dexcom has a near-best 98 Earnings Per Share Rating out of 99. Dexcom stock carries a 94 Composite Rating and has an A SMR Rating (sales + profit margins + return on equity). There really are no yellow flags for its stock.
Additionally, its B Accumulation/Distribution Rating shows that mutual funds, university funds and other institutional investors are fairly heavy buyers of its stock. That's a bullish indicator because as much as 70% of all trades are executed by large funds.
Tops Buy Point, Keeps Going
The Sector Leaders stock traded at about 136 Tuesday afternoon. Dexcom stock is now considered extended and out of buy range after clearing a 132.03 buy point in a first-stage flat base on March 6, seen on a weekly chart. See if the stock forms a new pattern or follow-on buying opportunity like a three-weeks-tight pattern or pullback to the 50-day or 10-week line.
The San Diego-based company reported 47% earnings growth in its most recent quarter, to 50 cents per share. The prior three periods its EPS grew 113%, 100% and 79%. Sales rose 27% last quarter to $1.035 billion. The prior three stanzas its sales grew 18%, 25% and 27%. Look for the next earnings report on or around April 25.
Dexcom stock earns the No. 2 rank among its peers in the 131-stock Medical-Products industry group. Small LifeMD, with about $150 million annual sales, is the top-ranked stock in the group. Integer Holdings is No. 3. Integer develops power sources for implantable devices.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
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