Is It Too Late to Buy DexCom (DXCM) Stock?

RiverPark Advisors, LLC recently published its Q4 2020 RiverPark Large Growth Fund commentary – a copy of which can be downloaded here. During the fourth quarter of 2020, the RiverPark Large Growth Fund returned 18.66% (institutional shares), compared to the total return of 12.15% by the S&P 500 Index. You should check out RiverPark’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q4 2020 Investor Letter, the fund highlighted a few stocks and DexCom Inc (NASDAQ:DXCM) is one of them. DexCom Inc (NASDAQ:DXCM) is a company that develops, manufactures, and distributes continuous glucose monitoring systems for diabetes management. In the last three months, DexCom Inc (NASDAQ:DXCM) stock gained 0.1% and on March 23rd it had a closing price of $364.17. Here is what the fund said:

“DXCM shares were our final top detractor for the quarter. The company reported solid third quarter results that comfortably exceeded expectations at 26% revenue growth, its highest quarterly gross margin in two years at 68%, and $147 million of EBITDA (29% margin), 50% above expectations. However, revenue growth slowed during the quarter (from pricing headwinds) as new patient growth shifted toward the lower priced pharmacy and Medicare channels. We have expected these headwinds and believe that pricing is simply tracking more quickly towards a broad equilibrium ahead of its new product launch.

DexCom is the leading manufacturer of continuous glucose monitoring (CGM) systems for diabetes, with the most accurate CGM device on the market, as well as a significant new product in development–the G7, which is smaller than a quarter, longer wear, and lower cost than its current G6 monitor. Dexcom’s CGM is a platform technology addressing multiple diabetes populations and providers, and eventually other uses for its sensor technology, providing the company a long runway for growth (we expect greater than 20% annual revenue growth for years to come). We also believe that the business will be extremely profitable at scale driving its adjusted EBITDA margin from 15% last year to 25% for 2023. We expect the company to generate 40% annual EPS growth over the next few years, while also generating sizable excess free cash flow.”

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Earlier this month, we published an article revealing that Baron Funds is bullish on DexCom Inc (NASDAQ:DXCM) stock.

In Q4 2020, the number of bullish hedge fund positions on DexCom Inc (NASDAQ:DXCM) stock decreased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in DexCom’s growth potential. Our calculations showed that DexCom Inc (NASDAQ:DXCM) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.