Update: DexCom's CEO Selling Shares, Key Takeaway

Aug.25.14 | About: DexCom, Inc. (DXCM)


DexCom’s CEO Terrance H. Gregg and several other insiders have been selling shares of DexCom aggressively over the past few days.

In my original article I said that the stock is trading at a fair valuation at $42 until there is more visibility in terms of future earnings.

Aggressive insider selling activity over the past few days supports my view that the stock is fully valued at the current price.

DexCom's (NASDAQ:DXCM) CEO Terrance H. Gregg has sold 75,000 shares of DexCom stock on August 19 at an average price of $45.08, for a total value of $3,381,000.00. He has sold 23,893 shares in another transaction at an average price of $44.36, for a total value of $1,059,893. Several other insiders have also sold shares of the company's stock over the past few days.

The stock rose substantially post second quarter earnings, followed by the news that DexCom has partnered with a privately-held company, called Asante Solutions, in order to integrate insulin data from the Asante Snap Insulin Pump into its mobile app platform. DexCom has been developing its mobile app platform for aggregating glucose and other diabetes-related data from patients' devices and display the integrated data on a smartphone. DexCom has entered into the collaboration with Asante in order to facilitate simplified diabetes management based on Asante's platform.

In my original article, I said that shares of DexCom are fully valued at $42, and I reiterated my opinion in the company's earnings update. At the current price, DexCom is trading at 36x estimated 2017 EPS, which I believe isn't justified until there is more visibility in terms of future earnings. I'd recommend investors selling the stock around the current price.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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