DexCom, Inc. (NASDAQ:DXCM) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.9% to hit US$501m. DexCom also reported a statutory profit of US$0.73, which was an impressive 58% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 20 analysts covering DexCom are now predicting revenues of US$2.33b in 2021. If met, this would reflect a major 36% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 45% to US$3.22. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.30b and earnings per share (EPS) of US$2.89 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$444, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic DexCom analyst has a price target of US$504 per share, while the most pessimistic values it at US$207. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of DexCom'shistorical trends, as next year's 36% revenue growth is roughly in line with 31% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.6% per year. So although DexCom is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards DexCom following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$444, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple DexCom analysts - going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 4 warning signs for DexCom that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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