Yahoo Finance DexCom, Inc. Just Beat EPS By 76%: Here's What Analysts Think Will Happen Next
A week ago, DexCom, Inc. (NASDAQ:DXCM) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$452m, some 8.8% above estimates, and statutory earnings per share (EPS) coming in at US$0.48, 76% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for DexCom
After the latest results, the 20 analysts covering DexCom are now predicting revenues of US$1.84b in 2020. If met, this would reflect a credible 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to drop 19% to US$1.79 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.80b and earnings per share (EPS) of US$1.67 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that the analysts have increased their price target for DexCom 12% to US$442on the back of these upgrades. 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$540 per share, while the most pessimistic values it at US$185. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DexCom's past performance and to peers in the same industry. It's pretty clear that there is an expectation that DexCom's revenue growth will slow down substantially, with revenues next year expected to grow 7.1%, compared to a historical growth rate of 31% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that DexCom is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around DexCom's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple DexCom analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - DexCom has 4 warning signs we think you should be aware 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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