Diabetes management and glucose monitoring solutions provider DexCom (DXCM) recently released its fourth-quarter results, reporting $1.0 billion in revenue, up 27% YoY, compared to $820 million a year ago, observes Todd Shaver, editor of Bull Market Report.

The company posted a profit of $200 million, or $0.50 per share, against $140 million, or $0.34, with a beat on consensus estimates on the top and bottom lines, coupled with a strong outlook for the new year. Its full-year figures were similarly impressive, with $3.6 billion in revenues, up 24%, compared to $2.9 billion a year ago.

It posted a profit of $620 million, or $1.52 per share, against $350 million, or $0.87, driven by record new customers -- 600,000, and the global rollout of its DexCom G7 which continues to see strong traction, with over 18,000 physicians across the country writing scripts for it. (That is a big number.)

DexCom had a strange year in 2023, largely owing to misconceptions regarding its future in the diabetes management space, as anti-obesity GLP-1 drugs became more popular. However, drugs like Wegovy, Ozempic, and Zepbound are great tools in the fight against diabetes, but they are unlikely to remove the need for diabetes monitoring in patients.

With the total number of diabetics across the world set to grow from 540 million to 780 million by 2045, Dexcom’s real-time, continuous glucose monitoring systems are an essential replacement to traditional fingerstick testing. Its value proposition swells many times over when paired with insulin delivery systems from Eli Lilly (LLY), Novo Nordisk (NVO), Insulet (PODD), and Tandem Diabetes (TNDM), among others.

The stock has been on a steady ascendant streak over the past four months, and while a valuation of 12 times sales and 60 times earnings is anything but cheap, its massive addressable market, in conjunction with a CAGR of 28% makes up for it.

DexCom should start offering dividends and buybacks soon, given its robust balance sheet position, with $2.7 billion in cash, $2.5 billion in debt, and $750 million in cash flow.

We love this company and believe the stock is going way higher. After all, 74% of Americans are overweight, and 34% are obese. The last four years of revenues were $1.9 billion, $2.4 billion, $2.9 billion, and $3.6 billion. We can see $4.4 billion or more in 2024. Given our expectations, it is only a matter of time before the stock breaks its $161 high, which it had hit in 2021. We’re behind this company 100%.

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