Bill Gunderson

About the Author Bill Gunderson

Bill Gunderson is the CEO and Chief Market Strategist of Gunderson Capital Managment in San Diego, CA. He is also a professional money manager, former research analyst, author of Best Stocks Now, and developer of the Best Stocks Now smartphone app. He offers four free weeks to his weekly Best Stocks Now to Seeking Alpha readers. He also hosts a daily stock market radio show on AM1000 KCEO from 7am-8am. Bill has appeared on the Fox Business Channel and on Bloomberg radio numerous times. He has been published in Barron's, Forbes, and numerous other publications i.e. Los Angeles Business Journal, San Diego Union Tribune, Phoenix Business Journal, Salem News, Rochester Business Journal, and many others.

DexCom: More Good News For Diabetes Patients And Shareholders

DexCom (NASDAQ:DXCM) stock is trading up on news that its medical app system, the DexCom Share system, to be used in conjunction with its G4 Platinum Continuous Glucose Monitoring device, received FDA approval.

San Diego-based DexCom, besides being one of my favorite diabetes stocks, is a leader in continuous glucose monitoring (CGM) systems for patients with diabetes. The DexCom Share system transmits data from a small, wire-like sensor inserted under the skin. The subcutaneous sensor then sends glucose levels to a monitor that is worn externally and allows users to share that information wirelessly.

The glucose-monitoring apps can be used with mobile devices such as the iPhone and Android to remotely track the health of a diabetic. The system also stores information in the cloud for past and future reference. Although other similar systems exist, this is the first application to receive FDA approval.

This innovative technology has been eagerly awaited by the diabetes community as it allows caregivers of young children with diabetes the ability to monitor their glucose levels remotely. The system has been approved for patients over the age of two. Of the estimated 25.8 million people in the U.S. with diabetes, 215,000 are under the age of 20.

Obviously, the market opportunity for CGM’s is huge. And the adoption of DexCom’s new product suite has been rapid. Product revenues have grown over 60% on a year-over-year basis for the last six consecutive quarters.

The company still faces stiff competition from companies like Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), and Medtronic (NYSE:MDT). But DexCom’s revolutionary G4 Platinum with SHARE system, which targets young diabetes patients and their remote caregivers represents a major breakthrough in glucose monitoring technology. And the DexCom SHARE cradle and FREE SHARE service is available at a moderate price of $299.

Shares of DexCom traded up more than 7.5% on news of the approval to a new all-time high level.

Let’s take a look at the stock using the Best Stocks Now app.

Data from Best Stocks Now app

DexCom is a small capitalization medical device company with a market cap of $4.4 billion. Its risk profile is Aggressive and I own the stock in my Speculative trading accounts.

Data from Best Stocks Now app

Valuation is difficult to measure using traditional metrics given that fact that DexCom is not yet earnings positive. It is not cheap on a Price to Book basis of 36. But this company is a growth story, not a valuation play. As mentioned previously, this company’s quarterly revenue growth is in excess of 60%.

Data from Best Stocks Now app

The stock receives a Momentum Grade of A. The stock was a big winner last year, up 55.5% in 2014. The stock was up only 5% YTD prior to this recent announcement. This FDA approval acts as a valuable endorsement of DexCom’s product line and should pave the way for greater adoption and even more future growth.

Data from Best Stocks Now app

DexCom ranks a Strong Buy in the Best Stocks Now universe, ranking #17 out of more than 3900 stocks. It receives a Stock Grade of A.

DexCom remains one of my favorite diabetes stocks, but more importantly DexCom’s products are becoming a favorite of diabetes patients and their caregivers to help them better monitor their glucose levels and manage their disease. Absent a cure for diabetes, DexCom’s product suite represents a welcome breakthrough in care for diabetes patients.

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