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Why Diabetes Stock Dexcom Jumped 14.6% in February While the Market Dropped

By Beth McKenna - Mar 6, 2020 at 8:30AM

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Shares of the medical device maker bucked the coronavirus-driven market sell-off.

What happened

Shares of medical device maker Dexcom, Inc. (DXCM -0.69%) gained 14.6% in February, according to data from S&P Global Market Intelligence

That performance is even stronger than it might initially seem considering the S&P 500 index dropped 8.2% last month due to concerns that the novel coronavirus, COVID-19, could blunt global economic growth. 

Dexcom stock is up a whopping 95.1% over the one-year period through March 5, compared to the broader market's 10.6% return over this period.

The G6 continuous glucose monitor and various smart watches and phones.

Image source: Dexcom.

So what

We can attribute Dexcom stock's strong performance last month to the healthcare company's Feb. 13 release of fourth-quarter 2019 results that pleased investors. Shares soared 12.6% the next day.

In Q4, revenue jumped 37% year over year to $462.8 million, driven by the continued robust demand from people living with diabetes for the company's G6 continuous glucose monitoring (CGM) systems. That result easily topped the $442.4 million Wall Street consensus estimate. Adjusted earnings came in at $106.5 million, or $1.15 per share, up from $50.2 million, or $0.56 per share, in the year-ago period. That result also sprinted by the analyst expectation, which was $0.74.

DXCM Chart

Data by YCharts.

Now what

Dexcom reaffirmed its guidance for full-year 2020. It expects revenue of $1.73 billion to $1.78 billion, representing growth of 17% to 20% year over year. It also projects adjusted operating margin of approximately 13%, compared to 10.9% in 2019.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.

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