DexCom Tumbles 12% After Earnings Miss, Analysts Say Plunge 'Greatly Exaggerated'

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By Senad Karaahmetovic

Shares of DexCom Inc (NASDAQ:DXCM) plunged more than 12% in premarket Friday following weaker-than-expected Q2 results.

DexCom reported an adjusted EPS of 17c to miss on the expected 24c. Revenue was reported at $696.2 million, again lower than the estimate of $700.8 million. The weaker-than-expected results were driven by the soft performance of the US business, where revenues missed the average analyst estimate by c2.5%.

For the full year, DXCM sees revenues between $2.86 billion to $2.91 billion, an upgraded view compared to the prior outlook of $2.82 billion to $2.94 billion. Analysts were calling for a full-year revenue outlook of $2.92 billion.

A Stifel analyst believes the stock reaction is “greatly exaggerated” and “feels overdone.”

“We don’t believe there is any change in underlying market dynamics and expect 2H22/2023 growth to accelerate as G7 rolls-out, PCP traction increases, mix headwinds dissipate, and Basal coverage plays-out,” the analyst told clients.

An Oppenheimer analyst added that he is a buyer on weakness for the following reasons.

“1) US revenues missed estimates at 11% growth (OUS outperformed). Importantly, we estimate unit growth ~30% y/y with the delta to revenue growth DXCM's ongoing actions to shift current and new patients to the pharmacy channel. As pharmacy mix levels off, this delta should tighten. 2) A software change is being made to G7 based on FDA feedback, causing slight US launch delay (limited launch expected now 4Q). Visibility on getting the change into FDA sounds good as does the rest of the submission. Payer discussions continue, allowing for faster ramp upon launch. Buyers ahead of G7 and with T2/international building,” the analyst explained in a note.