Claire Reach doesn't have diabetes. But the 40-year-old amateur triathlete is determined to lead a healthy lifestyle. That quest led her to a device designed to help people struggling with the debilitating disease.
Reach uses a continuous glucose monitor called Lingo, a biowearable device that she says helps her track her metabolism by indicating "the difference in energy levels and the lack of slump that you have after certain foods," she told Investor's Business Daily.
Consumers like Reach are getting Wall Street excited — and that has translated into a resurgence for Dexcom stock. Dexcom makes one of the leading continuous glucose monitors and just won Food and Drug Administration clearance for a new body-worn device that targets patients with a less severe form of diabetes.
Dexcom shares have rallied 13% this year, as of the close on April 10. That topped the medical products industry group, which rose just 1.4% over the same time period. It also beat out shares of rivals Abbott Laboratories and Medtronic, both of which remain flat.
Investors expect continuous glucose monitors, or CGMs, to spread further by adding users who want to track their metabolism or lose weight. The fast-growing market is dominated by Dexcom, Abbott and Medtronic. But Dexcom is the only pure play company among the three.
Last year, the continuous glucose monitor market was worth an estimated $4.6 billion, according to Grand View Research. By 2030, the market research firm expects the CGM market to be worth a whopping $7.51 billion, growing at a 7.19% compounded annual rate from 2024 to 2030.
Dexcom Stock Rallies On FDA Win
Last month, Dexcom stock rallied after the Food and Drug Administration cleared the new Dexcom CGM, Stelo, for people who don't require insulin treatment. Stelo will be available over the counter, meaning users don't need a prescription.
Abbott's Lingo, which is already available in the U.K., could soon follow in the U.S.
Dexcom's fourth-quarter sales rocketed 27% and easily beat expectations. In fact, sales have climbed 25% to 27% for three straight quarters. Jake Leach, Dexcom's chief operating officer, says the rising popularity of weight-loss drugs has strengthened sales of continuous glucose monitors.
"There's a lot of benefit for the two (weight-loss drugs and continuous glucose monitors) to be used in combination," he told IBD.
Today, Dexcom stock has a strong Composite Rating of 97 out of a best-possible 99. This means it ranks in the top 3% of all stocks in terms of fundamental and technical measures, according to IBD Digital.
Glucose Monitors Track Blood Sugar
Continuous glucose monitors allow users to track their blood sugar in real time. Until now, they have largely been used by patients with diabetes.
That's already a huge and lucrative market. RBC Capital Markets analyst Shagun Singh estimates that just 2.5% of patients with diabetes use one of the body-worn devices from Abbott, Dexcom or Medtronic.
Singh has a buy rating on Dexcom stock. She also rates Abbott stock a buy.
William Blair analyst Margaret Kaczor Andrew says 7.5 million people in the U.S. require insulin treatment for diabetes. Another 25 million have type 2 diabetes but don't require insulin shots or body-worn pumps.
The Metabolic Health Drive For Dexcom Stock
The FDA's decision on Stelo blows the doors wide-open to an even bigger opportunity. The move was a nod to the burgeoning metabolic health space, which Andrew says could eventually include 100 million CGM users. Andrew has a buy ratings on both Abbott and Dexcom stocks.
The focus on metabolic health is growing for a reason.
Knowing how your blood sugar reacts to certain foods, exercise and sleep is key to shedding pounds and preventing chronic diseases, said Dr. Florence Comite, an endocrinologist and founder of the Comite Center for Precision Medicine and Healthy Longevity. Doctors are now prescribing continuous glucose monitors alongside weight-loss drugs, she says.
"Six in 10 Americans have at least one chronic disease and four in 10 have two. And I believe that's an understatement," she told IBD. "So, this can help change the trajectory of the $4 trillion-plus we spend in GDP (gross domestic product) every year on health care. ... Can you imagine stopping chronic disease in this country? That would be incredible."
Dexcom Stock And The Pandemic
Metabolic health is tied to a person's ability to consume and use energy efficiently. Doctors measure this by examining a patient's blood sugar, triglycerides and cholesterol, as well as blood pressure and waist circumference. These five measurements are all connected.
A 2019 study in the journal Metabolic Health and Related Disorders found only about 12% of adults in the U.S. are considered metabolically healthy.
The Covid pandemic shined a light on metabolic health. It was also a period of prosperity for Dexcom stock and Abbott stock. Shares rose a respective 69% and 26%. It's important to note, Abbott's move was more closely related to the success of its Covid tests.
Still, a March 2023 report from the National Library of Medicine showed people with metabolic syndrome were 2.3 times more likely to die from Covid-19 than people without the disease. Metabolic syndrome is a cluster of conditions that collectively increase the risk of heart attack, diabetes and stroke. It's often linked to obesity.
Improving Metabolic Health
Reach, the Lingo CGM user, lives in Suffolk, England. She says the pandemic pushed her to find ways to improve her metabolic health. This led her to CGMs, which helped her minimize the guesswork in diet and exercise.
Reach doesn't have type 2 diabetes, though her father does. She landed on Lingo after trying several experimental CGMs.
Reach wasn't looking to lose weight. In fact, she says she probably gained weight in the form of muscle as a result of her workouts. As she ramped up her activity levels, Reach began competing in triathlons. She said a CGM helped her become more attuned to her body's needs, particularly when it comes to food's impact on her endurance and sleep.
It also helped her pinpoint ways to improve her diet. Breakfast proved to be a key pivot point, she realized. Reach also found foods that favor protein and fat over carbohydrates and sugar. She discovered that eating a piece of chocolate before bed, for example, could disturb her sleep.
'The Language Of Your Body'
Reach is a prime example of why Abbott Labs created Lingo. The company chose the name because the product "helps you understand the language of your body and what it's telling you," said Olivier Ropars, divisional vice president for Abbott's Lingo business.
Research has found a connection between maintaining low glucose curves and preventing diseases like cardiovascular conditions, diabetes, Alzheimer's disease and cancer, he says.
"This inspired us to develop a product that would bring our glucose monitoring technology to an audience that traditional health care companies don't usually target — the healthy — to help them stay healthy," Ropars said in an email to Investor's Business Daily.
Experts say CGMs are a good place to start for people looking to better understand their body's reactions to food and exercise. And investors in Dexcom stock and Abbott stock are paying close attention.
Antoni Adamrovich, founder of TB2.Health, an online clinic that prescribes weight-loss drugs, says CGMs "allow the patient to specifically track how their body reacts to food and exercise and make changes to their diet and activity levels that will positively affect their metabolic health."
Reach affirmed this point as she described the convenience of using a CGM. "When you see it right in front of you on a screen and it shows you how your blood glucose is dropping, it all makes a lot more sense a lot more quickly," she said.
Weight-Loss Drugs And Glucose Monitors
In fact, glucose monitors are expected to play a critical role in the growing market of weight-loss drugs. That's a major reversal from a period of tumult for Dexcom stock in 2023.
On Oct. 10, Novo Nordisk said a weekly shot of its weight-loss drug, semaglutide, delayed progression in chronic kidney disease patients with type 2 diabetes. Dexcom shares tumbled more than 11% over the next two days. Abbott stock toppled 7.6%.
But William Blair's Andrew says CGM usage will only increase over time.
"While we believe the low-hanging-fruit patient profile includes individuals who are at risk of developing diabetes or considered prediabetic, there are other metabolic use cases we expect to increase over time, such as for improving nutrition, weight loss and athletic performance," she told clients.
The Food Research and Action Center estimates that about four in 10 adults in the U.S. have obesity and another 8% have severe obesity. In addition, 32% of U.S. adults are overweight.
Dexcom Stock Lodges Comeback
The FDA has approved two weight-loss drugs, Wegovy from Novo and Eli Lilly's Zepbound. The agency has also signed off on Wegovy as a means of lowering the risk of cardiovascular issues like heart attack and stroke for people with obesity.
Both meds have become wildly popular, contributing to expectations for weight-loss drugs to be a $100 billion market by the end of the decade. Wegovy and Zepbound are expected to bring in a combined $12.24 billion this year. By 2029, analysts expect the two drugs to generate a whopping $37.67 billion in sales — growing an impressive threefold over the five years.
Demand for weight-loss has driven Dexcom stock to a recent high at 142 on March 26. That's still short of the stock's all-time high at 164.86, achieved in November 2021.
Following Novo's news in October, Dexcom stock hit a recent bottom at 74.75. From there, shares soared 88% as of April 10. Dexcom shares are now above a buy zone on a technical basis after breaking out on news of the FDA's Stelo clearance, according to MarketSurge.com.
Abbott stock also hit a low point at 89.67 in mid-October. Since then, shares have popped almost 24% as of the April 10 close.
Caution About Expanded Use Of CGMs
Yet some experts are concerned about selling CGMs to people without diabetes. In an ironic twist, that worry is shared by Dexcom COO Leach.
"Products need to be fit for a purpose," he said. He sees a significant opportunity for continuous glucose monitors to help people with prediabetes. So, too, do Dexcom stock analysts.
But "the needs of someone trying to optimize their athletic performance are different than someone who is trying to lose weight or manage their diabetes better," he said. "You've got to build an experience with the whole product that meets people's needs."
Reach, the triathlete, said she is mindful of the way she uses CGM, acknowledging, "Sometimes, you can get too into this and too involved."
"I'm a firm believer in everything in moderation," she said. "You don't want to be cutting every food out."
A More Thoughtful Approach
Dr. Chris Thompson, a weight-loss doctor and founder of Bariendo, a network of clinics that provide nonsurgical ways to lose body weight, warned against taking continuous glucose monitor findings as gospel.
"This is one area where technology is a little ahead of the science," Thompson, a professor of medicine at Harvard Medical School, told IBD.
He stressed a key point: Continuous glucose monitors only measure glucose. Many other factors feed into metabolic health, including free fatty acids and inflammatory markers.
"You could have heavily processed meat and maybe that doesn't spike your glucose," he told IBD. "So, somebody might think, 'Oh, I should eat baloney all day long because it's not spiking my glucose,' when, in the end, that might be much worse for the person than having a couple of free-range chicken eggs and some whole multigrain bread."
"We have to keep in mind this is just one variable," Thompson added. "We don't really want to pathologize normal physiological reactions within the body. It's normal for your blood glucose to fluctuate in response to a meal."
An Expanding Market Potential
Still, Dexcom stock analysts are upbeat about the glucose monitors' market potential.
Dexcom is expected to see a massive sales boost in the U.S., thanks to the metabolic health craze. Abbott Labs hopes to follow its lead.
In a January interview with IBD, Dexcom Chief Executive Kevin Sayer noted the success Dexcom has enjoyed with insulin-using diabetics. Dexcom's annual sales have grown between 19% and 43% over the past five years.
"We have been very successful in the insulin community," he said. "We felt the next logical step for us was to go to this type 2 non-insulin-using population with our next experience in using continuous glucose monitoring to address more of a health care need rather than a health and wellness need."
That was before the FDA gave Stelo a green light in the U.S. William Blair's Andrew says Dexcom's Stelo sales will depend on how the company markets it. The metabolic health space is huge. Conservatively, she expects $200 million in sales of Stelo in 2025. That's a big jump from her $31 million view for 2024.
Dexcom stock has an improving Relative Strength Rating of 87. That has risen from 68 just four weeks ago, though has fallen from 90 three months ago. Abbott stock, though, has a middling RS Rating of 54, though that has improved from 52 over the past week. Three months ago, it had a stronger rating of 77.
Abbott Stock Eyes Next Blockbuster
Unlike Dexcom, Abbott Labs is going straight for metabolic health users with Lingo. The firm unveiled the device in January 2022 at the CES conference. It's now selling the monitor in the U.K. During Abbott's third-quarter earnings conference call, Chief Executive Robert Ford called Lingo "a great growth opportunity for us."
Abbott stock rose 3.7% on Oct. 18, the day the company report its earnings.
The company hasn't detailed its sales of Lingo. But Singh, the RBC analyst, notes Abbott Labs has said Lingo could be a billion-dollar product. FreeStyle Libre, Abbott's flagship continuous glucose monitor for patients with diabetes, generated $5.3 billion in sales last year.
Abbott's Ropars said the company is in discussions with the FDA, but doesn't have an update on when Lingo could launch in the U.S.
Dexcom says Stelo could account for about 1% of total 2024 sales — about $42.5 million based on the company's guidance. The company hopes to launch Stelo this summer in the U.S. Dexcom stock analysts currently project $4.33 billion in full-year sales for the company.
Medtronic didn't return a request for comment about its continuous glucose monitor business.
Glucose Monitors And Metabolic Health
The technology offers promising health outcomes for people who want better control of their health, said Comite, the endocrinologist.
A device like Abbott Labs' Lingo "can change destiny for people because they can take control of their health destiny," she said. "Even if diabetes and heart disease runs in your family, you don't have to go down that track if you're cognizant of what's going on in your body. It's almost like having a coach that's part of you."
"Having the ability to change your future trajectory and health is mind-blowing in a way," she said.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
