DXCM : NASDAQ : US$38.21
DexCom is a medical device firm focused on pioneering
technologies for the continuous monitoring of glucose
levels in people with diabetes. The company has received
FDA approval for its short-term continuous glucose
monitoring system (CGMS), the DexCom STS system, and
in June 2007 gained approval for its second-generation
STS Seven system.
Life Sciences — Biomedical Devices and Services
DXCM Q2/14 CRUSHES IT; THE BEST IS
YET TO COME; REITERATE BUY, PRICE
TARGET TO $48
We reiterate our BUY rating following strong Q2/14 results that came in
well above our and consensus estimates. Demand for the Gen4 system
continues, with pediatric sales demonstrating the potential to be a strong
lever for growth throughout 2014. Specifically, pediatrics accounted for
25-30% of new patient additions in the first full quarter of sales and are
expected to grow as the company further penetrates the pediatric
endocrinology market. Lastly, the JNJ/Animas VIBE SAP in the US and
DexCom Share both present potential upside to current estimates in the
Q2/14 results were well above our/Street estimates with product
revenues of $58.2M, up 64% Y/Y, well above our $51.7M estimate.
Both durable revenues (~$17.5M) and consumable sales (~$40.7M)
beat our estimates of $14.6M/$37.1M, respectively.
Product GMs of 67.9% were up Y/Y and beat our 66.6% estimate.
2014 guidance was raised with product revenues now expected in the
range of $220M-$235M (~40%-50% growth Y/Y), up from $205M-
We are increasing our price target to $48.00 from $40.00. We base our
valuation on an 11.8x EV/sales multiple applied to our 2015E revenue
estimate of $301.0M.