Earnings Beat: DexCom, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, DexCom, Inc. (NASDAQ:DXCM) just kicked off its latest quarterly results with some very strong numbers. The company beat forecasts, with revenue of US$1.2b, some 2.6% above estimates, and statutory earnings per share (EPS) coming in at US$0.70, 27% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Taking into account the latest results, the most recent consensus for DexCom from 26 analysts is for revenues of US$5.25b in 2026. If met, it would imply a notable 16% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 34% to US$2.48. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.33b and earnings per share (EPS) of US$2.54 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Check out our latest analysis for DexCom

The average price target fell 11% to US$87.80, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on DexCom, with the most bullish analyst valuing it at US$115 and the most bearish at US$75.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that DexCom's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.4% per year. Even after the forecast slowdown in growth, it seems obvious that DexCom is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for DexCom. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of DexCom's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple DexCom analysts - going out to 2027, and you can see them free on our platform here.

You can also see our analysis of DexCom's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.