Dexcom Stock Plummets on Earnings Miss and Guidance Cut
Shares of Dexcom (DXCM) tumbled over 40% in extended trading Thursday after the company reported second-quarter earnings that missed estimates and slashed its full-year revenue guidance. The maker of glucose monitors said it now expects full-year organic revenue growth of 11% to 13%, down from its projection in April of 17% to 21%.
Disappointing Second Quarter Results
Dexcom’s revenue in the second quarter grew 15% year-over-year to $1 billion, roughly in line with analysts’ estimates compiled by Visible Alpha. However, net income of $143.5 million or 35 cents per share missed expectations.
“While Dexcom advanced several key strategic initiatives in the second quarter, our execution did not meet our high standards,” CEO Kevin Sayer said in a release, adding “we are taking action to improve our execution and best position ourselves for continued long-term growth.”
Stock Buyback Program
In addition to the disappointing earnings report, Dexcom also announced a $750 million stock buyback program. This move is aimed at boosting investor confidence and indicates that the company believes its stock is undervalued.
Investor Reaction
Shares of Dexcom were down 40.1% at $64.50 in extended trading as of 5:40 p.m. ET Thursday following the release. This significant drop in stock price reflects investor disappointment in the company’s performance and its revised revenue guidance.
Looking Ahead
Despite the disappointing second-quarter results, Dexcom remains optimistic about its long-term growth prospects. The company is taking action to improve its execution and is confident that it can position itself for continued success.
As the maker of glucose monitors, Dexcom operates in a growing market. The demand for glucose monitoring devices is expected to increase as the prevalence of diabetes continues to rise globally. Dexcom’s innovative products have gained significant traction in the market, and the company is well-positioned to capitalize on this trend.
Furthermore, Dexcom’s stock buyback program demonstrates the company’s confidence in its future performance. By repurchasing its own shares, Dexcom is signaling that it believes the stock is undervalued and that it has faith in its ability to generate long-term value for shareholders.
However, Dexcom will need to address the issues that led to its disappointing second-quarter results. The company’s execution fell short of its high standards, and it must take decisive action to improve its performance. By doing so, Dexcom can regain investor confidence and set itself up for sustainable growth in the future.
Conclusion
Dexcom’s stock took a significant hit after the company reported second-quarter earnings that missed estimates and lowered its full-year revenue guidance. The disappointing results were attributed to execution issues, prompting the company to take action to improve its performance. Dexcom remains optimistic about its long-term growth prospects, given the increasing demand for glucose monitoring devices. The company’s stock buyback program further demonstrates its confidence in its future performance. However, Dexcom will need to address the issues that led to its underperformance and regain investor confidence. By doing so, Dexcom can position itself for continued success in the growing market for glucose monitors.
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