DexCom Is 'Expanding Rapidly' With Multi-Year Runway Ahead, Bullish Analyst Says

DexCom Inc’s DXCM Stelo Glucose Biosensor System has been approved by the Food and Drug Administration (FDA) as the first over-the-counter (OTC) continuous glucose monitor (CGM).

DexCom’s global total addressable market (TAM) is expanding rapidly, positioning the company for revenue upside, according to RBC Capital Markets.

The DexCom Analyst: Shagun Singh initiated coverage of DexCom with an Outperform rating and price target of $165.

The DexCom Thesis: The San Diego-based company has “a multi-year runway ahead” and appears poised to become one of the fastest-growing large-cap MedTech companies, Singh said in the initiation note.

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Stelo, which is scheduled for a launch in summer 2024, is an immediate and major growth catalyst for DexCom, the analyst stated.

The company has received the first FDA-clearance for a non-prescription CGM, which “opens up 25MM patient Type 2 non-II market for patients TAM on oral, injectable, diet, and exercise” and “unlocks a 110MM patient TAM who could benefit from a non-prescription CGM, including 96MM prediabetics,” he added.

GLP-1 will be a “companion therapy” for Stelo and further drive CGM adoption, Singh wrote. “We see room for higher estimate revisions and multiple expansion,” he added.

DXCM Price Action: Shares of DexCom had risen by 0.75% to $134.04 at the time of publication on Tuesday.