New Trade for July 7th, 2023

Following yesterday’s release of June’s banner jobs data, markets are on high alert that the Fed will tighten policy even further. Investors now see a 91% likelihood that the central bank will raise rates at its July meeting, according to the FedWatch tool from CME Group. Policymakers recently indicated that two more rate hikes could be ahead in 2023.  

Companies that operate in industries like health care, utilities, and consumer staples are known to hold up well when interest rates rise because their offerings are needed in all phases of the economic cycle. Today we’re highlighting a leader from a defensive sector well-positioned to gain steam in the current market environment.   

DexCom (DXCM)

Diabetes is increasing at an alarming rate in the United States. According to the CDC’s National Diabetes Statistics Report, for 2022 cases of diabetes have risen to an estimated 37.3 million – about 1 in 10 people. Mid-cap medical device manufacturer, DexCom is responding with innovative solutions that are gaining popularity among the masses so much so that the company has recently reconsidered and raised its outlook.

In April, Medicare officials expanded reimbursement for continuous glucose monitors or CGMs to all patients who require insulin to manage their diabetes. It is the most significant expansion ever in the history of the CGM category providing access to a number of people who will benefit greatly. And it’s the tailwind leading CGM manufacturer DexCom has been waiting for.

Management now expects to reach $4.6 billion to $5.1 billion by 2023. That’s an increase of $600 million from the previous range for the year. DexCom’s sales last year rose 19% to $2.91 billion. Analysts polled by FactSet predict sales will rise 20% to $3.5 billion in 2023.

DexCom stock is highly rated across the board. According to Investor’s Business Daily, DexCom’s fundamental and technical measures warrant a place in the top 3% of all stocks. The 22 analysts covering the stock resoundingly agree, giving it a Strong Buy recommendation.   

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