DXCM
DexCom, Inc.
- Current Price
- $78.56
- Quality Score
- 7.8/10
- Opportunity Score
- 8.1/10
Published February 2026. Total return updates live against the current price. Past performance does not guarantee future results.
Price Performance
Historical price charts are provided for informational purposes only.
DexCom grew earnings 44% while holding 62% gross margins. The stock sits just below its 52-week high, and I'm putting $1,000 to work on it.
DexCom is a medical device company that pioneered continuous glucose monitoring, founded in 1999. It sells wearable sensors that track glucose in real time for people with diabetes, with a growing over-the-counter business. The company posts strong margins and is expanding its market globally.
The stock trades at $88.76, just under its $91.96 52-week high and far above the $54.11 low. Earnings grew 44% while revenue climbed 13%, and the forward PE of 28.41 sits well below the trailing 35.08, which means the market expects growth to keep coming. That's the setup I want.
Price Target at pick
| Current price | My price target | Upside |
|---|---|---|
| $88.76 | $94.12 | +6.0% |
My own estimate, not a guarantee, as of 2026-02-01.
Growth catalysts we were watching:
- G7 sensor adoption keeps climbing, and it's still taking share from fingersticks and older monitors
- Stelo, the over-the-counter sensor, opens up the type 2 and pre-diabetes crowd without a prescription
- International expansion into markets where CGM penetration is still tiny
- Automated insulin delivery deals with pump makers lock in recurring sensor revenue
Investment Thesis
What you'll find in this analysis:
01What is DexCom and its history?
DexCom has spent 25 years doing one thing and doing it well. Founded in 1999, the company pioneered continuous glucose monitoring, or CGM, and set the standard for how people with diabetes track their glucose.
Before DexCom, the standard was pricking your finger several times a day. DexCom's wearable sensor reads glucose under the skin continuously and beams the number to your phone. No fingersticks. No guessing. That simple idea turned into a real business, and the company now sells millions of sensors every year.
02What about this industry and future prospects?
The tailwind here is enormous and it's not going away. Diabetes keeps spreading, and most people who have it still don't use a CGM. The addressable market is measured in the millions of people globally, and DexCom's own leadership frames it exactly that way: a chance to help millions more people.
The push into type 2 and pre-diabetes, plus non-insulin users, is the part that excites me. That's a population many times larger than the type 1 market DexCom started with. Over-the-counter availability removes the prescription friction.
03Bull case and bear case
Bull case
- Bull case: the numbers do the talking. 62% gross margins, 20% profit margins, 38% return on equity, $1.0 billion in free cash flow. Revenue up 13%, earnings up 44%. A forward PE of 28.41 against a trailing 35.08. Howard Marks's Oaktree owns more than 40 million shares. This is a cash-generating franchise with a moat in a growing market.
- Bear case: I'm not going to pretend it's clean. Insiders have been selling. CEO Kevin Sayer sold over $2 million worth in July, and Mark Foletta sold repeatedly. When insiders sell into strength, I pay attention. Abbott's FreeStyle Libre is a brutal competitor with a bigger installed base and cheaper sensors, and a price war would compress those margins. The stock carries a beta of 1.41, so it'll swing harder than the market. The PEG sits at 1.69, so this isn't a bargain-bin entry. And the broader market looks stretched, with the Buffett indicator at 219 flashing strongly overvalued.
Bear case
- I've been burned before assuming insider sales mean nothing. They can mean something. But insider selling without context is noise more often than signal, and the business fundamentals here are still intact.
04Who are DexCom's customers?
Mostly people with diabetes. Type 1 users need CGM to dose insulin safely. Type 2 users are the growth story, especially the non-insulin crowd that Stelo targets. On top of that, DexCom sells into hospitals and clinics, and its sensors pair with insulin pumps from other makers for automated insulin delivery.
05Who are the competitors, and how is DexCom different?
Abbott's FreeStyle Libre is the big one. Medtronic's Guardian is in the mix too, and Senseonics has an implantable option. Libre is cheaper and has the bigger installed base, so DexCom can't win on price alone.
What DexCom has is accuracy and integration. The G7 is smaller and needs no fingerstick calibration, streaming continuously to a phone without a manual scan. Its sensors talk directly to insulin pumps from Omnipod and Tandem, so the whole loop adjusts insulin automatically. That's the differentiator Abbott hasn't fully matched.
06Why can we depend on DexCom for 3-5 years?
Because the financial foundation is rock solid. Gross margins of 62% mean the product has real pricing power. Profit margins of 20% and return on equity of 38% show management knows how to turn revenue into shareholder value. Free cash flow of $1.0 billion funds growth without leaning on debt, and the debt-to-equity ratio of 53 is manageable.
A company with a 62% gross margin, a recurring sensor revenue model, and a market that's still under-penetrated is built to survive a bad year or two. That's what I want when I'm holding for three to five years.
07What does the CEO say about future prospects?
Kevin Sayer laid out the growth vision on DexCom's Q2 2026 call. Here's exactly what he said:
"As we discussed at the event, we see a significant opportunity to help millions more people globally. In fact, through our ongoing advocacy work, access efforts, market expansion, and product development, we believe we can exit our LRP with an even larger market opportunity than we have today, and we plan to execute on that growth vision with one of the more compelling cash flow and margin profiles in the industry."
LRP is DexCom's long-range plan. The man running the company is telling you he expects a bigger market at the end of the plan than today, and he's backing it with the margin profile. That's not hype. That's a CEO with a durable franchise.
08How long, and how much of my portfolio?
This is a three-to-five-year hold, minimum. I'd size it as a modest position and build it over time with dollar-cost averaging rather than dumping the full amount in at once. This is one name in a diversified portfolio, not a bet-the-house trade. The beta of 1.41 means it'll be bumpy, so I want the position small enough that the swings don't rattle me.
I'm putting $1,000 to work here because the quality is obvious and the price hasn't run away from the earnings. If it dips toward the $54.11 low, I'll buy more. If it keeps climbing, I'll add on schedule. Either way, I hold.
*This information is for general knowledge and informational purposes only and does not constitute investment advice. All data sourced from the figures above.*
Disclaimer
For educational purposes only. Not investment advice. This analysis reflects our own opinions and research; past performance does not guarantee future results. Always do your own research before investing.