Dexcom plunges as revenue forecast cut spooks investors
Updates shares in paragraph 1, adds details from Abbott's device sales in paragraph 6
By Bhanvi Satija
July 26 (Reuters) -Dexcom DXCM.O shares slumped 41% after the glucose monitor maker slashed its annual revenue forecast, a move it attributed to the fallout from a revamp of its salesforce but which some analysts said raised questions about its long-term prospects.
Shares touched a four-year low of $64.37 in early trading on Friday, with nearly $17 billion of the company's market value set to be wiped out if losses hold.
The surprise forecast cut cast doubts over Dexcom's long-term growth, analysts said, amid rising competition from Abbott ABT.N and Medtronic MDT.N.
Baird analyst Jeff Johnson said Dexcom does not seem to be growing as fast as investors hoped to capture "basal only" diabetes patients who take one insulin injection a day, downgrading the stock to "neutral" from "outperform".
"More importantly ... it appears that Abbott is doing a better share of taking those basal only Type 2 patients and Dexcom's share is not keeping up," said Johnson.
Last week, Abbott reported an 18% jump in second-quarter sales of its FreeStyle Libre devices. It expects the device, including a recently approved over-the-counter version, to bring in sales of $10 billion by 2028.
Dexcom now expects 2024 revenue forecast to about $4 billion to $4.05 billion, versus $4.20 billion to $4.35 billion earlier.
As part of the restructuring, Dexcom changed which doctors its salespeople would approach, resulting in fewer-than-expected new patients.
Some analysts said the process was more disruptive than feared, while others termed the company's problems "self-inflicted", stemming from poor management execution.
At least half of the brokerages covering Dexcom's stock slashed their price targets.
The company, which signaled it had lost some market share for devices sold through distributors, added rebates, or after-market refunds, for its G7 glucose monitors affected how much revenue it made per customer in the second quarter.
The rebates were implemented in little over a year, versus the expected two-year timeline.
Recent share performance of glucose monitor makers https://reut.rs/3y4aDvX
Reporting by Kanchana Chakravarty and Bhanvi Satija in Bengaluru; Editing by Sriraj Kalluvila
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
