MDT - DexCom Is Pricey For A Reason - Its Growth Story Reflects That

2024-04-11 09:02:57 ET

Summary

• DexCom received FDA approval for its continuous glucose monitoring product, Stelo, to be available over the counter, making it the first OTC CGM product ever.
• The company has demonstrated robust growth in revenue and operating income, warranting its high valuation multiples.
• DexCom has strong growth catalysts, including the launch of Stelo, which is expected to contribute to significant revenue growth in the future.

Investment Thesis

DexCom ( DXCM ) is not exactly every investor’s cup of tea.

The company operates in the medical technology space, which is far away from the hype in mainstream AI, and yet, the company’s stock often confounds investors with its high valuation metrics, per my observation. Rightly so, because 93x trailing twelve-month earnings or 80x forward earnings is often considered expensive. However, I believe investors fail to observe the robust growth DexCom has been able to demonstrate over the past few years and often skip past the ramp it continues to build towards future growth....

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