BTIG Analyst Dives In on DexCom, Inc. (DXCM) As It Wins CMS Reimbursement


DexCom, Inc. (NASDAQ:DXCM) shares rose nearly 30% today, after the U.S. Centers for Medicare and Medicaid Services (CMS) established reimbursement for DexCom’s G5 Continuous Glucose Monitoring (CGM) System by classifying it as Durable Medical Equipment (DME), the first CGM device to receive this classification.

BTIG analyst Sean Lavin commented, “We aren’t surprised DXCM gained the classification and coverage, but we are surprised how quickly CMS reached this decision. The non-adjunctive label was granted less than a month ago in the middle of the holiday season. The fact that the ruling was released so expediently demonstrates that CMS recognizes the benefits of CGM.”

“The number of Medicare beneficiaries in the US with T1D is estimated to be around 150k (estimates vary). However, the opportunity for DXCM is beyond just addressing this population, as we believe that there are some doctors who haven’t adopted CGM technology at all due to the lack of Medicare coverage,” the analyst added.

Bottom line: “The early decision in our view demonstrates that CGM is high on the list of priorities for CMS and while not an immediate hockey stick should pad revenue growth.”

Subsequently, Lavin reiterated a Buy rating on shares of Dexcom, with a price target of $92, which represents a potential upside of 5% from where the stock is currently trading.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sean Lavin has a yearly average return of 9.4% and a 60% success rate. Lavin has a 6.3% average return when recommending DXCM, and is ranked #302 out of 4342 analysts.

Out of the 16 analysts polled by TipRanks, 14 rate Dexcom stock a Buy, while 2 rate the stock a Hold. With a downside potential of 2%, the stock’s consensus target price stands at $86.86.