Why DexCom (DXCM) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of DexCom Inc.  (DXCM) are up 1.2% to $38.74 after Sterne Agee upgraded the medical device company to "buy" from "neutral" with a price target of $50.

"We believe DexCom will once again record strong annual revenue growth due to its superior CGM technology. While many pediatrics with diabetes were already using the G4 Platinum prior to its February 2014 FDA approval for people with diabetes ages 2 to 17 years, our recent channel checks are pointing to a nice incremental boost in new customer additions stemming from this FDA approval," the firm noted

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TheStreet Ratings team rates DEXCOM INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DEXCOM INC (DXCM) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, DEXCOM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DEXCOM INC is rather high; currently it is at 69.63%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.02% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 141.67% to $4.40 million when compared to the same quarter last year. In addition, DEXCOM INC has also vastly surpassed the industry average cash flow growth rate of 3.94%.
  • DXCM's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.51, which clearly demonstrates the ability to cover short-term cash needs.
  • This stock has increased by 143.46% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in DXCM do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: DXCM Ratings Report

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