- Raymond James analyst Jayson Bedford upgraded DexCom Inc DXCM to Strong Buy from Outperform and increased the price target to $138 from $127.
- The analyst expects an acceleration in revenue growth from Q2 2023, which is not believed to be fully factored into current sentiment.
- Given the recent physician checks and the analyst's directional take on the latest script data, Bedford is confident that G7 opportunity (in people with type 2 diabetes) and basal adoption will drive the revenues more than initially expected.
- The physicians, whom the analyst spoke with, were using CGM in 80-90% of their type 1 population and expected this trend to play out nationwide (Bedford expects CGM penetration at around 60% in the U.S.). The physicians said G7 would accelerate CGM adoption in type 2s (currently at around 40%, ex basal, RJe), as stated by the analyst.
- Bedford believes in DCXM's initiatives, like lowering the original Bridge program impact in Q1, launching a DTC campaign for G7, and receiving earlier-than-expected CMS reimbursement for basal-only patients.
- The analyst expects the DTC campaign and CMS reimbursement to benefit the company in Q2. He identifies basal adoption as a source of upside in 2023 and 2024.
- The analyst expects net pricing (mainly through channel mix) to continue as a headwind.
- Bedford notes that the CGM market is under-penetrated, with about 32% of people on insulin using CGM, as per RJe, driving strong volume growth. He believes that G7 manufacturing expenses in Malaysia will hit scale in 2025, which should shield or enhance DXCM's margins.
- Price Action: DXCM shares are trading higher by 2.29% at $118.35 on the last check Monday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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