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Why DexCom Stock Is Dropping Today

By Prosper Junior Bakiny - Apr 30, 2021 at 12:06PM

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Investors were not pleased with the company's latest earnings report.

What happened?

Shares of medical devices company DexCom (DXCM 4.16%) are dropping sharply on Friday after the company announced its first-quarter 2021 financial results on Thursday afternoon. As of 11:29 a.m. EDT today, DexCom's stock was down 6.3%.

So what

It isn't immediately clear why the market is reacting the way it is following DexCom's quarterly update. The company's revenue of $505 million -- representing a 25% year-over-year increase -- came in above the average analyst estimate for roughly $482.6 million. Also, DexCom's adjusted earnings per share of $0.33 came in above the $0.31 consensus analyst estimate, although it dropped noticeably from the $0.44 adjusted EPS it reported during the prior-year quarter.

Doctor holding a sign that says "diabetes."

Image source: Getty Images.

With DexCom's top and bottom lines beating analyst projections, why are some investors running for the hills today? One possible explanation is that the company's top-line guidance for the full fiscal year 2021 isn't impressive. DexCom expects to record revenue between $2.26 billion and $2.36 billion during the current fiscal year, which at the midpoint is slightly below the $2.33 billion analysts are looking for.

Now what

It's important for investors to remain focused on the long term. Whatever reason the market has for sending DexCom's stock lower today doesn't matter nearly as much as the company's investment thesis. And there was nothing in DexCom's quarterly update that indicated a change in its prospects.

DexCom remains one of the leaders in diabetes care thanks to its G6 continuous glucose monitoring (CGM) system. And with the CGM space set to grow rapidly in the coming years, this healthcare stock is still worth serious consideration.

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