Analyst Note| Debbie S. Wang |
No-moat DexCom’s second-quarter results held few surprises, and considering the firm is tracking with our full-year projections, we’re leaving our fair value estimate unchanged. After shares traded at nose-bleed levels for the last few years that we couldn’t justify with any reasonable (or even aggressive) estimates, DexCom shares have fallen to our intrinsic value, and we consider them fairly valued at this point. Now that DexCom has successfully engineered and begun commercializing its next-gen G7 continuous glucose monitor, we have greater confidence that this firm can continue innovating to remain a key competitor in the CGM market, despite considerable competitive pressure from Abbott and Medtronic. We think it’s time to revisit our thinking on DexCom’s negative moat trend and reassess the strength of the firm’s intangible assets.