DexCom (DXCM) Stock Has Larger Growth Potential

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The medical device company, DexCom Inc. (DXCM), is currently trading around 30 percent below 52-week highs. This could be a good time for investors to enter, as by entering new markets and expanding its target audience, the business still has space for expansion.

DXCM’s focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems. The wearable CGM helps to lower the number of injections and make monitoring more comfortable for people with diabetes. It is possible to upload sensor data to a mobile app that allows patients to calibrate their consumption of glucose-stabilizing drugs as well as food.

For patients undergoing intensive insulin care, the targeted demand for DexCom sensors is Intensive Insulin Therapy (IIT). In the United States, there are reportedly more than 3 million such patients. According to the company, DexCom monitors are used by about 20 percent of patients on insulin tolerance test (ITT) with type-2 diabetes and about 40 percent of patients with type-1 diabetes on ITT. This implies that DexCom still has space for revenue to grow. In addition, the company aims to provide solutions for diabetic patients who do not require IIT. With about $27 million in the US alone, this is an even bigger market. The growth potential of DexCom is much greater outside the US.

DexCom raised sales to over $500 million in the last quarter, which was a new record for the firm, despite some difficulties related to COVID-19. A good financial balance is the benefit of DexCom as the firm has a $1.82 billion debt, which is not too much relative to its $2.6 billion cash reserves.

However, significant risks are also correlated with improving the role of rivals, such as Abbott Laboratories (ABT). The CGM product line of Abbott is more comprehensive, and it can draw customers to its product ecosystem.

DexCom Inc. (DXCM) share closed at $319.68, up 0.46% on Monday.

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