Zacks_Analysts' Blog : DexCom Meets, Beats on Sales - Analyst Blog

DexCom (DXCM) reported its second-quarter 2010 loss per share of 20 cents, matching the Zacks Consensus Estimate and improving from the year-ago loss of 33 cents.

 

Revenues

 

Total revenue (consisted of “Product revenue" and “Development grant and other revenue") rose 75% year over year to $11.8 million in the reported quarter, beating the Zacks Consensus Estimate of $11 million. Product sales soared 120% year over year to $9.0 million in the quarter, while development grant and other revenue rose marginally to $2.7 million.

 

Margin

 

Gross margin turned around sharply to 38.3% in the black, from 15.5% in the red in the year-ago period. Operating margin remained in the red at 95.6%, an improvement nonetheless from 199.3% in the prior-year period.

 

Balance Sheet

 

As of June 30, 2010, the company had $6.1 million in cash and cash equivalents, up 45% year over year. Long-term debt, inclusive of current portion, declined sharply to $4.2 million from $44.9 million in the year-ago period.

 

Outlook

 

DexCom has not provided any financial forecast. We believe the company is well positioned to gain a significant share of the glucose monitoring market. Moreover, the company remains active on the collaboration front and continues to upgrade and enhance the functions of existing products.

 

However, we note that competition in the market is fierce with big players like Johnson & Johnson (JNJ), Medtronic (MDT), and Abbott (ABT) accounting for a major part of self-monitored glucose testing systems revenues. Our Neutral recommendation on DexCom is supported by a Zacks #3 Rank (Hold).