In the past 30 days, 17 analysts have raised their EPS estimates for this medical device company.
DexCom, Inc. (DXCM)
From Cabot Growth Investor
While diabetes stocks aren’t an official “sector” in the market, it’s one of our favorite growth themes, as millions of patients are still pricking themselves many times a day to get glucose readings (and most are also still injecting themselves with insulin, too).
But technology advancements are changing all of that, and DexCom, Inc.’s (DXCM) G6 continuous glucose monitor is one of the leaders in the field, allowing users to forego fingersticks and recalibrations, digitally share the data with others automatically (big if you have diabetic kids, for instance) and, most importantly, keep glucose at safe levels.
There is competition from Abbott and others, but (a) most believe DexCom currently has the best mousetrap and (b) the market is so big that all the big players should benefit.
As for the stock, it did nothing for 14 months, but the recent earnings report catapulted DXCM to new highs on massive volume and the stock has continued higher since. It looks like a liquid leader in the medical field to us. We bought a half position last Friday (via our update Thursday evening) and are off to a good start; if it continues to act well, we’ll look to fill out our position, though we’d prefer to do so on a bit of weakness or a few days of consolidation. BUY A HALF.
November 27 update from Mike:
DexCom is acting just like a liquid leader should, with a powerful gap and strong upside follow-through afterwards. Like many names, DXCM could easily pull back some from here (possibly a sharp day or two of selling?), but we think there’s plenty of upside left down the road. If you want to try to pinpoint a buy on dips, that’s fine, but we’re going to fill out our position around here (adding another half-sized position), and will use a mental stop in the mid/high 180s to start. BUY ANOTHER HALF.
Michael Cintolo, Cabot Growth Investor, www.cabotwealth.com, 978-745-5532, November 21 & 27, 2019