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Why DexCom Shares Are Flying Higher Today

What happened

Shares of DexCom (NASDAQ: DXCM) were flying 15.4% higher as of 11:44 a.m. EST on Friday. The big gain came following the company's announcement of its 2019 fourth-quarter and full-year results after the market closed on Thursday.

DexCom reported Q4 revenue of $462.8 million, up 37% year over year and well above the average analysts' estimate of $442.4 million. It also announced adjusted earnings of $106.5 million, or $1.15 per share. This reflected significant improvement from adjusted earnings of $50.2 million, or $0.56 per share, posted in the prior-year period. It also blew past the consensus Wall Street earnings estimate of $0.74 per share.

Image source: Getty Images.

So what

When a company beats estimates the way DexCom did with its Q4 results, its stock is bound to jump. The key question to ask, though, is: Why did the company top estimates?

In DexCom's case, the answer is simple. The company's G6 continuous glucose monitoring (CGM) systems continue to enjoy strong customer demand. And that strong demand isn't just in the U.S. DexCom's international sales grew even faster than its U.S. sales did in the fourth quarter.

This momentum seems likely to continue. Diabetes remains a serious problem across the world. Real-time CGM offers a way for patients to keep their diabetes under control.

Now what

DexCom's nice jump today probably won't fade away. The company projects strong full-year 2020 revenue growth. With sales for the G6 device soaring and a new G7 CGM coming in the future, DexCom appears to be one of the most promising healthcare stocks on the market.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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