Why DexCom Shares Soared

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical device company DexCom (NASDAQ: DXCM  ) surged 21% today after its quarterly results blew out Wall Street expectations.

So what: DexCom shares have soared over the past year on better-than-expected growth, and today's third-quarter results -- loss of $0.08 was $0.05 better than Wall Street's view, while revenue surged 86% -- only reinforce that positive trend. In fact, the company posted gross margins of 65% in the quarter versus just 40% in the year-ago period, giving analysts plenty of good vibes over its potential profitability.

Now what: Don't expect the operating momentum to slow anytime soon.

"[W]hile we are not formally adjusting our full-year guidance at this time, we are confident that we'll exceed the top end of our current range of $140 million in product revenue," COO Kevin Sayer said in a conference call with analysts.

Of course, with DexCom shares now up 180% over its 52-week lows and trading at a price-to-sales multiple in the mid-teens, much of that confidence might already be baked into the valuation.

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Related Tickers

9/27/2016 4:00 PM
DXCM $93.72 Up +0.56 +0.60%
DexCom CAPS Rating: **