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What's in the Offing for DexCom's (DXCM) Earnings in Q2?

Zacks Equity Research

DexCom, Inc. DXCM is expected to release second-quarter 2019 results on Jul 31, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of 70.6%. Further, it has an average four-quarter positive surprise of 149.9%.

Which Way Are Estimates Treading?

Currently, the Zacks Consensus Estimate for second-quarter revenues is pegged at $302.2 million, suggesting growth of 24.6% from the year-ago reported number. The same for adjusted earnings is at breakeven level.

DexCom, Inc. Price and EPS Surprise

 

DexCom, Inc. Price and EPS Surprise
DexCom, Inc. Price and EPS Surprise

DexCom, Inc. price-eps-surprise | DexCom, Inc. Quote

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Key Catalysts

Possible increase in volumes across all channels and rising global awareness of the company’s real-time CGM is likely to aid DexCom’s top line in the upcoming quarterly results.

Moreover, the company raised 2019 revenue outlook and now anticipates total revenues in the range of $1.25-$1.3 billion (up from the previously guided range of $1.18-$1.23 billion). Consequently, we expect the company to witness a similar trend in the to-be-reported quarter.

With respect to DexCom’s FDA-cleared CGM system — the DexCom G4 Platinum has been boosting the company’s top line significantly and we expect the moment to sustain in the to-be-reported quarter.

Per management, the company is well poised to achieve a long-term target on the back of the expansion of the rollout of G6 and improve access to CGM. With this growing demand in mind, the company is on track to meet its goal of doubling G6 capacity by the end of 2019. Therefore, this rising demand is anticipated to positively impact the company’s overall performance in the to-be-reported quarter.

DexCom has a sizeable international market opportunity on the back of the demographic trends and lifestyle in countries outside the United States and Europe. To that end, we expect the company to deliver higher international revenues in the to-be-reported quarter.

Given the improved operational discipline, the company might have experienced better operating margins in the second quarter.

However, the company projects restructuring related cost to approximately range between $15 million and $20 million for 2019 with the majority being incurred in the first half. Going by this projection, we expect a similar trend in the to-be-reported quarter.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: DexCom has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: DexCom carries a Zacks Rank #1.

Meanwhile, we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Adamis Pharmaceuticals Corporation ADMP has an Earnings ESP of +11.76% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here. 

DENTSPLY SIRONA XRAY has an Earnings ESP of +6.95% and a Zacks Rank #1.

Allena Pharmaceuticals, Inc. ALNA has an Earnings ESP of +7.55% and a Zacks Rank #2.

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DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
Adamis Pharmaceuticals Corporation (ADMP) : Free Stock Analysis Report
 
DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
 
Allena Pharmaceuticals, Inc. (ALNA) : Free Stock Analysis Report
 
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Zacks Investment Research