Dexcom shares crash nearly 40% as execution miss drives 2024 guidance cut

Investing.com -- Dexcom slashed its guidance Thursday after reporting second-quarter revenue fell short of estimates as the diabetes management solutions provider flagged weaker execution of key strategies. 

DexCom Inc (NASDAQ:DXCM) fell more than 37% in premarket trading Friday.

The company now expects revenue of approximately $4.00B to $4.05B for the fiscal 2024, down from prior guidance of $4.20B to $4.35B. 

"While Dexcom advanced several key strategic initiatives in the second quarter, our execution did not meet our high standards," the company said.

The company reported Q2 earnings $0.43 per share on revenue of $1.00 billion, compared with estimates of $0.39 on revenue of $1.04B. 

For Q3, revenue was guided in a range of $ $975M to $1.00B, missing analyst estimates of $1.15B.  

"There’s no getting away from the fact that this Thursday’s update was a sharp turn in the wrong direction for Dexcom," JPMorgan analysts said in a note.

"We expect shares will struggle to outperform as it navigates these near-term challenges and works to rebuild investor trust," analysts added, downgrading the DXCM stock from Overweight to Neutral and nearly halving the price target from $145 to $75. 

"While we still walked away from earnings with some unanswered questions, we feel very confident that this is due to multiple self-inflicted issues rather than a market growth issue. The TAM is substantial and the opportunity remains for the long-term."

Meanwhile, comments from RBC analysts were notably less negative. While acknowledging that the execution miss was "disappointing," the investment bank believes the near 40% sell-off in the stock "is unjustified." 

"We are buyers on weakness," RBC added, maintaining an Outperform rating but trimming the target price from $165 to $145. 

Yasin Ebrahim contributed to this report.