Dexcom- wow- when the mo players come out of a stock, they come out of a stock. They have just decimated this issue in the last two weeks. In my view, time to reload.
This is the same company that completed a 4.7 million share offering at $24 per share at the end of April. This is the same company Jim Cramer described as a major player in the burgeoning diabetes market.
By way of a refresher course- DXCM came public in the spring of ’05 at $12 per share. The company has developed a wireless blood glucose monitoring system- a little sensor implanted in your abdomen sends a signal to a hand held device- it delivers real time blood glucose monitoring to the patient. The device was approved for market by the FDA at the end of March- about 1 year after coming public. The device has many benefits for diabetics.
We have a great history with this stock, and I have fond memories of a huge trading win earlier this year. Here’s the chart:
I believe short sellers have been behind some fairly vicious rumors about the company. Last week there was a rumor going around that the company was recalling a bunch of devices- not true.
This week the rumor relates to insurance reimbursement. No one was expecting this device to be reimbursable from the insurance companies so soon. There have also been rumors about problems in the sales department- also not true. They have a total of 22 sales people nationwide who are just starting to market the product.
I thought $13.50 was about the bottom, and I picked up 2k shares around that level. Much to my surprise, the stock gave up another $1.50 early this week.
At some point someone is going to have something positive to say about this company. In the meantime- who knows- the stock could go to $9.
I have seen this pattern repeated time and time again. A few months after the storm clouds pass, you wonder why you didn’t accumulate some shares and hang on to them.
I’m not going to miss this opportunity- I am accumulating with an eye towards going up into the 7500 to 10,000 share range, with an $18 price target towards year end.
Comments and questions are welcome.
Where do you see serious support levels for DXCM? With earnings report out and poor, insurance companies not eager to embrace (yet), what will float this boat in near future? Pretty soon it will be at new all time lows and I read that funding is coming to an end….what is your take on DXCM at present? you were looking at $18 by year end…that looks way to optimistic now…..
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Editor: The reimbursement issue has nothing to do with insurance companies- it’s all about medicare. Once Medicare reimburses, the insurance companies will follow. The company is working on the process to obtain reimbursement status, but from the time they got the FDA Approval, it wasn’t expected for a year or two. The reason the stock got killed was because Medtronic was denied in their efforts to obtain reimbursement. I am told by people in the industry that their application was poorly done and lacked good studies. In answer to your question- there are a number of potential catalysts to get the stock going- 1. Approval of the 7 day version 2. Clinical studies showing people using the device save money on drugs because they manage their disease much better 3. Reimbursement application and approval. In my view, the problem is 100% market driven at this time. After all- the stock was $21 when they got the FDA Approval- and $24 when the did their secondary offering. I believe it is possible the stock could trade down to $9, at which point I would buy more. Of course, I believe there will be a rotation out of energy and commodity stocks into biotech and tech in the next bull market, which I am quite sure will come in the Fall. If I am wrong, it could get worst. However, over the years, the point at which people can’t see any reason for any stock to ever go up again has proven the best time to accumulate.
I got my Dexcom STS last Wednesday and I have had nothing but trouble with it since. Readings deviate from finger sticks by 50-100%. One sensor gave me an early shut off after one day of use; they’re supposed to last 3 days. I wish I could return it. Definitely does not function as advertised.
Editor: Very sorry to hear you are having so much difficulty. I am not a diabetic, but I have had direct contact with others using it, and they love it. The company is closing in on a seven day version, and I hope you have a better experience. Your contribution is appreciated. Perhaps it helps explain why the stock is trading so poorly.