DexCom Shares Plummet Despite Strong Q2 Results and Bullish Revenue Outlook

DexCom (DXCM) shares have dropped 6% despite positive Q2 earnings and a revised 2025 revenue forecast. Analysts project a 34.61% upside potential based on current price targets, with estimates ranging from $86.22 to $120.00. GuruFocus estimates a 120.6% upside potential to $169.47. The company's gross margin fell to 60.1% from last year's 63.5%.

DexCom, Inc. (DXCM) shares have dropped 6% despite positive second-quarter (Q2) earnings and a revised 2025 revenue forecast. The company reported a 16% year-over-year (YoY) revenue growth to $1.2 billion, driven by international expansion and product innovation [1]. However, analysts project a 34.61% upside potential based on current price targets, ranging from $86.22 to $120.00. GuruFocus estimates a 120.6% upside potential to $169.47 [2].

Despite the positive earnings, the company's gross margin fell to 60.1% from last year's 63.5%, primarily due to higher logistics costs and expedited shipping [1]. Management expects sequential improvement as supply-chain normalization continues, but sustained investment in distribution and warranty programs may weigh on profitability in the near term.

The company's leadership transition, scheduled for early 2026, also poses execution risks. CEO Kevin Sayer will step down, handing leadership to current president Jake Leach. While Leach is well-regarded, transitions of this magnitude always carry execution risks [1].

Analysts have cited margin pressures, regulatory uncertainty, and competitive threats as reasons for the stock's underperformance. Abbott Laboratories (ABT) and Medtronic (MDT) are seen as significant competitors, with Abbott's FreeStyle Libre portfolio and Medtronic's Smart MDI and MiniMed 780G systems gaining traction [1].

Investors should continue to hold the stock and wait for greater clarity on execution in type 2 non-insulin adoption, international scale-up, and margin recovery before revisiting a more bullish outlook. DexCom currently carries a Zacks Rank #3 (Hold) [1].

References:
[1] https://www.nasdaq.com/articles/dexcom-expands-access-and-innovation-while-balancing-headwinds
[2] https://www.ainvest.com/news/dexcom-q2-25-results-16-revenue-growth-expanded-cgm-coverage-2508/