New Trade for October 2nd, 2023

Traditionally one of the most stable sectors, everyone needs healthcare at some point regardless of income status. “The defensive aspects of the sector, while not fully appreciated at times over the past few years, is beginning to kick in in a rather meaningful way,” said Jared Holz, a healthcare strategist at Oppenheimer.   

Today, we’re focusing on a name offering defensive growth from the desirable healthcare sector with a bevy of built-in advantages over peers from the group.   

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 in 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 increase 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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