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DexCom Inc DXCM

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Morningstar’s Analysis

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Dexcom Sees Strength in First Quarter That Should Continue Upon European Launch of G7 by End of Year

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

No-moat Dexcom posted strong first-quarter performance that was largely in line with our expectations for the full year. However, after dialing up our expectations for the impending launch of next-generation G7, we plan to modestly raise our fair value estimate. Shares remain overvalued, from our perspective. The firm continues making progress toward navigating the regulatory path to commercializing G7. We anticipate the firm will file for European regulatory approval shortly, and management remains firm that Dexcom should launch in that geography by the end of this year. Additionally, with the U.S. pivotal trial set to wrap up this summer, we could see G7 launch domestically in the second half of 2022. Considering Dexcom has firmly crossed over into profitability, we think it’s appropriate to reexamine whether the firm has dug a moat for itself. At first blush, we think there may be an argument for intangible assets--specifically the firm’s ability to innovate and offer superior accuracy in its continuous glucose monitors.

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Company Profile

Business Description

Dexcom designs and commercializes continuous glucose monitoring systems for diabetics. CGM systems serve as an alternative to the traditional blood glucose meter process, and the company is evolving its CGM systems to include the disposable sensor and the durable receiver.

6340 Sequence Drive
San Diego, CA, 92121
T +1 858 200-0200
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Speculative Growth
Employees 6,400