DXCM - DexCom adds 10% as Medicare updates coverage for glucose monitoring

DexCom ( NASDAQ: DXCM ) shares jumped ~10% in the pre-market trading Friday after the Centers for Medicare and Medicaid Services (SMC) issued a proposed local coverage determination related to continuous glucose monitoring devices.

Wall Street analysts covering the makers of CGM products welcomed the news. DXCM’s rivals in the CGM market include Abbott Laboratories ( ABT ) and Senseonics Holdings ( SENS )

If the proposal is finalized, the decision will double the market opportunity for continuous glucose monitoring from 4M patients to 8M per year, Wells Fargo analyst Larry Biegelsen argued.

The proposed LCD indicates “a best case scenario for ABT and DXCM because the coverage is broad and the codes are the same as type 1 and type 2 insulin intensive, therefore, the payment is the same,” the analyst added.

Piper Sandler analyst Matt O’Brien who has an Overweight rating on DXCM, lifted the price target to $120 from $110 per share, noting: “DXCM will reclaim its position as the highest multiple name in diabetes following this announcement.”

In addition, Stifel analyst Mathew Blackman with a Buy rating on DXCM, raised the price target on the stock to $120 from $112 per share in reaction to the news. “This is an unequivocally positive development for DXCM (and ABT), with seemingly little in the way of proposed patient restrictions on the 3-4M US basal population,” Blackman added.

The update comes at a time when ABT, DXCM, and SENS have all sold off this year, as indicated in this graph.

For further details see: