What happened

Medical device company DexCom (NASDAQ:DXCM) saw its shares gain a stately 31.5% during the month of April, according to data from S&P Global Market Intelligence. The company's shares burst higher last month for two inter-related reasons.

So what

First up, DexCom's stock lost as much as 30% of its value in March in response to the COVID-19 sell-off. Bargain hunters clearly viewed this dip as a once-in-a-lifetime buying opportunity. Underscoring this point, the biotech's shares have now gained an astounding 112% since hitting a two-year low in late March. That's a nearly unheard of type of move for a large-cap stock. 

A wooden spoon pouring sugar on a wooden table around a set of wooden blocks that spell the word diabetes

Image Source: Getty Images.

Secondly, DexCom crushed Wall Street's consensus first-quarter revenue forecast toward the end of April. Thanks to strong demand for its continuous glucose monitoring (CGM) devices, DexCom topped analysts' Q1 revenue estimate by a staggering 13.3%.

While the company couldn't rule out negative impacts from the ongoing COVID-19 pandemic, DexCom has yet to experience any significant headwinds from this outbreak. Not many large-cap healthcare companies can make that claim right now.  

Now what

Is DexCom's stock still a strong buy? That's a hard question to answer. DexCom's stock has repeatedly defied conventional wisdom when it comes to classic valuation metrics. As proof, the company's shares have consistently been valued at over 15 times forward-looking sales.

DexCom's incredible run, however, may be close to hitting a high-water mark after this latest surge. The stock, after all, is now valued at an astronomical 17.3 times 2021 projected sales. That's an exceedingly rich valuation, even for an ultra high-growth company like DexCom. As such, it might be a good idea to wait for a more attractive entry point. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.