DexCom extends drop to reach five-month low

Shares of DexCom (NASDAQ:DXCM) fell for the third straight session on Friday to reach the lowest level since April, even as the continuous glucose monitoring (CGM) equipment maker managed to retain its bullish views on Wall Street despite a short report on Thursday.

TD Cowen and Baird were among the firms to reiterate their buy-equivalent ratings after Hunterbrook Capital issued a short report on the stock, for which the maker of the G7 CGM System has yet to respond to Seeking Alpha’s requests for comments.

TD Cowen’s Joshua Jennings, who maintained a Buy rating and $100 per share target, noted that the short report validates the bear thesis on the G7 sensor's reliability, and a “solid” Q3 report could be vital to quash concerns.

“Much of this concern is already embedded in valuation, and our endocrinologist checks plus prescription trends indicate DXCM is not losing share at present,” Bloomberg News reported, quoting Jennings.

While there is a risk that reliability issues can escalate and hurt demand, “management asserts they’re managing a minor issue and remain confident in achieving 2025 targets.”

However, Baird analyst Jeff Johnson wrote that there is a noteworthy increase in G6/G7 "injury" reports for July/August, which, according to him, could indicate that DXCM's earlier comments regarding stable G7 warranty claims/other issues could no longer be valid.

“We’re reserving judgment about potential 2025-2026 financial implications for DXCM, but we’re incrementally cautious on this name pending [Seagrove] survey results,” Johnson wrote, referring to market data on the CGM market. He maintained his Outperform rating and a $112 target on DXCM.