DXCM: A Diabetes Monitoring Company With Robust Growth Prospects

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We are initiating coverage of DexCom Inc. (DXCM) with a “Buy” rating and a $100 target price. DexCom designs, manufactures, and markets continuous glucose monitoring (CGM) systems for people with diabetes to maintain glycemic control and reduce diabetes-related health issues.

In 2024, DexCom derived 72% of its revenues from the US and 28% internationally. The company has a large manufacturing presence in the US and Malaysia, with a new facility in Ireland, which we view favorably as it relates to limiting tariff exposure. At the end of 2024, DexCom had more than 2.8 million global customers.

DexCom Inc. (DXCM)

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We see DXCM operating in a robust growth market. According to the latest International Diabetes Federation Diabetes Atlas, one in nine adults (20-79 years) live with diabetes. Importantly, over 40% are unaware that they have it. By 2050, that figure is expected to increase to one in eight adults.

The American Diabetes Association estimates that in the US, diabetes treatment accounts for around 25% of healthcare dollars spent, at an annual cost above $400 billion. DexCom’s initial target market was Type 1 diabetes (T1D), an autoimmune disorder that typically develops during childhood and is marked by an absence of insulin, requiring infusion therapy. T1D comprises a modest percentage of the total diabetes market.

DXCM has been expanding its presence among patients with Type 2 diabetes (T2D), a more prevalent metabolic disorder that results when the body is unable to produce sufficient amounts of insulin or becomes insulin-resistant. Approximately 5 million to 6 million people in the US must use insulin to manage their diabetes.

T2D patients who do not require insulin therapy represent a much larger patient US population, approximately 25 million, that DXCM is targeting and building coverage to serve. In the US, T2D prevalence has grown significantly over the past 50 years due to increased levels of obesity.

According to GlobalData, the global CGM products market was worth approximately $11.1 billion in 2024 and is projected to grow to $12.8 billion by 2025. DexCom has a leading market position in the US and has cited a majority market share in both T1D/T2D populations. Globally, DXCM is behind only Abbott Laboratories (ABT) in CGM revenues.

Recommended Action: Buy DXCM.

In 2024, DexCom derived 72% of its revenues from the US and 28% internationally. The company has a large manufacturing presence in the US and Malaysia, with a new facility in Ireland, which we view favorably as it relates to limiting tariff exposure. At the end of 2024, DexCom had more than 2.8 million global customers.

DexCom Inc. (DXCM)
 

P8BYbXxIXOxbgAAAABJRU5ErkJggg==


We see DXCM operating in a robust growth market. According to the latest International Diabetes Federation Diabetes Atlas, one in nine adults (20-79 years) live with diabetes. Importantly, over 40% are unaware that they have it. By 2050, that figure is expected to increase to one in eight adults.

The American Diabetes Association estimates that in the US, diabetes treatment accounts for around 25% of healthcare dollars spent, at an annual cost above $400 billion. DexCom’s initial target market was Type 1 diabetes (T1D), an autoimmune disorder that typically develops during childhood and is marked by an absence of insulin, requiring infusion therapy. T1D comprises a modest percentage of the total diabetes market.

DXCM has been expanding its presence among patients with Type 2 diabetes (T2D), a more prevalent metabolic disorder that results when the body is unable to produce sufficient amounts of insulin or becomes insulin-resistant. Approximately 5 million to 6 million people in the US must use insulin to manage their diabetes.

T2D patients who do not require insulin therapy represent a much larger patient US population, approximately 25 million, that DXCM is targeting and building coverage to serve. In the US, T2D prevalence has grown significantly over the past 50 years due to increased levels of obesity.

According to GlobalData, the global CGM products market was worth approximately $11.1 billion in 2024 and is projected to grow to $12.8 billion by 2025. DexCom has a leading market position in the US and has cited a majority market share in both T1D/T2D populations. Globally, DXCM is behind only Abbott Laboratories (ABT) in CGM revenues.

Recommended Action: Buy DXCM.


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