DXCM - Bernstein initiates DexCom with an outperform rating citing long growth runway

DexCom ( NASDAQ: DXCM ) stock rose as much as 4% to $79.55 in Friday trading amidst stronger broader U.S. markets , with shares also helped by Bernstein research initiating the company with an outperform rating.

Bernstein analyst Lee Hambright in a research note dated July 14 gave DXCM stock a price target of $105, which represents a 37.3% upside to DXCM' last closing price of $76.50.

San Diego, Calif.-based DexCom's ( DXCM ) main product is the G6 continuous glucose monitoring (CGM) system, which is a small, wearable sensor and transmitter that helps diabetic people keep an eye on their glucose numbers every five minutes. The company is also developing a new G7 model.

Hambright said that DXCM has a long runway for growth, as the core market is still only 30% penetrated.

The Bernstein analyst believes that DXCM's numbers will go up over the next one to two years, driven by U.S. FDA approval for G7 and Medicare reimbursement for basal-only insulin users, both of which Hambright says are likely to come in H2 2022.

"DXCM is a clear buy over a 1-/2-year horizon. Even with conservative growth and margin estimates, we're 3% ahead of consensus on the top line," said Hambright.

DXCM is slated to announce its Q2 results after market close on July 28.

Bernstein's outperform rating compares to a Wall Street average rating of strong buy and a SA Authors rating and Quant rating of hold.

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