William Blair Reiterates Outperform on DexCom (DXCM)

William Blair & Company is out with a research report this morning, where it reiterates its Outperform rating on DexCom Inc.

; it did not provide a price target for the stock. The WB analysts cited that company’s recent earnings report, which was slightly better than expected. Product gross margin was up 610 basis points in the quarter to 30.1%, well above their 26% target, as higher volumes and increased inventory build to support expected sales growth spread overhead. They also cited the company’s work with Edwards Lifesciences

on the second-generation hospital-based CGM, with is expected to launch by the end of next year. The timing of product approvals and subsequent milestone payments for these products is uncertain, which will give DexCom a lumpy revenue stream in the coming quarters. However, the WB analysts’ views, the company has more than enough cash to fund operations (currently $42 million) even if the milestone payments are delayed, and importantly, core product revenues continue to grow rapidly, which are the key to the company’s long-term growth.