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Image source: DexCom.

What: After investment firm Robert W. Baird downgraded the stock from outperform to neutral, shares in DexCom (NASDAQ:DXCM) were down 21.5% at 2:00 p.m. ET today.

So what: Despite reporting at the J.P. Morgan healthcare conference last month that unaudited revenue from the sale of DexCom's continous glucose monitors jumped 54% to approximately $400 million in 2015, the company's shares have fallen 40.5% this year.

Contributing to investors' concern is DexCom's spending plans.

DexCom plans to build a new factory, expand in the EU, and funnel more money into R&D this year, and that means the company's operating margin may take a short-term hit in 2016. As a result, industry watchers have reduced their EPS forecast to a loss of $0.05 in 2016, down from a gain of $0.20 90 days ago.

Take Long View

Now what: Although spending may weigh down profit this year, the global diabetes market is expected to climb to 642 million people in 2040 from 415 million people today, and that should mean a healthy trajectory for future sales -- especially if DexCom can successfully negotiate Medicare and Medicaid reimbursement and make headway into the type 2 diabetes market.

At the J.P. Morgan healthcare conference, DexCom forecast sales of $540 million to $565 million in 2016, up at least 35% from last year. 

That projection suggests a slowing in year-over-year growth, but it's still healthy enough to make this company intriguing, particularly given that Baird's new $74 price target is still nicely higher than shares are trading today. 

Overall, investors might want to consider stepping up and buying shares on this sell-off, because DexCom has seen a tenfold increase in revenue since 2011, yet it's only penetrated a small slice of this massive addressable market. 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.