Bernstein cuts DexCom price target to $88, maintains Outperform

On Friday, DexCom shares witnessed a revision in their price target by Bernstein analysts. The new target is set at $88.00, a decrease from the previous target of $100.00. Currently trading at $70.26, the stock has seen a challenging year with a -44.5% return over the past 12 months. Despite this change, the firm continues to hold an Outperform rating on the (NASDAQ:DXCM) stock, aligning with the broader analyst consensus of 1.42 (Strong Buy).

The adjustment in the price target was informed by a revised price-to-sales (P/S) multiple. Bernstein analysts now apply a multiple of 6.5x, a reduction from the earlier 7.5x, to the company’s projected forward sales for the next four quarters, Q5 through Q8. These sales estimates have been slightly increased to $5.50 billion from $5.33 billion. According to InvestingPro data, DexCom maintains strong fundamentals with a "GREAT" Financial Health score of 3.1 out of 5, despite trading at high valuation multiples.

The analysts cited several reasons for the optimistic outlook on DexCom stock. They identified multiple growth catalysts that could potentially drive the stock’s performance upwards. The company’s prospects are seen as favorable, with expectations of considerable upside potential. Supporting this view, InvestingPro analysis shows robust revenue growth of 11.3% and a healthy gross profit margin of 60.5%. For deeper insights into DexCom’s growth metrics and 12+ additional ProTips, consider exploring the comprehensive Pro Research Report.

However, the report also acknowledged certain risks that could impact DexCom’s trajectory. These include the competitive landscape, particularly with rivals like Abbott (ABT), potential supply chain issues, quality control and FDA risks, as well as a lack of clarity on pricing strategies.

In light of these factors, Bernstein has decided to lower the target multiple to better reflect the risks associated with DexCom. Despite the reduced price target, the Outperform rating indicates that the firm’s analysts still foresee DexCom outperforming the broader market.

In other recent news, DexCom reported its first-quarter revenue of $1.04 billion, surpassing analyst estimates of $1.02 billion. This marks a 14% year-over-year organic growth and a 12% increase on a reported basis. However, the company’s adjusted earnings per share were slightly below expectations, coming in at $0.32 compared to the anticipated $0.33. DexCom’s U.S. revenue saw a 15% increase, while international revenue grew 12% organically, though it did not meet the $308 million consensus expectation. BTIG analyst Marie Thibault raised the price target for DexCom shares to $109, maintaining a Buy rating, citing signs of the company returning to prior performance levels. Despite a lower-than-expected gross margin of 57.5%, DexCom maintained its sales outlook for 2025 at $4.6 billion and updated its non-GAAP gross profit margin guidance to approximately 62% for the year. The company also announced a $750 million share repurchase program and reported holding $2.70 billion in cash and marketable securities. DexCom’s management highlighted a record number of new customers, particularly among Type 2 diabetes patients not using insulin, as a key growth area.

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