Dexcom Earnings: Ongoing Adoption of G7 and Favorable Reimbursement Suggest Strong 2024

Dexcom’s strong fourth-quarter performance wrapped up a solid year that slightly exceeded our expectations. However, our mild adjustments weren’t enough to shift our $105 fair value estimate. Organic quarterly revenue rose 26%, and Dexcom’s full-year 24% sales growth hit our estimate on the nose. The firm also eked out roughly 90 basis points of combined improvement in costs of goods sold and sales and marketing expenses. Our estimate for $3.4 billion in revenue for 2024 is on the high side of management’s outlook, which we think is supported by the recent expansion in Type 2 reimbursement and Dexcom’s continuous glucose monitor, or CGM, pipeline. With its business growing in size and scope, as well as heightened competition from Abbott, this year could be an inflection point with implications for Dexcom’s no-moat status. If the firm can successfully fend off competition, we may revisit our thinking on Dexcom’s moat.