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The Future Of Dexcom

Jul. 05, 2017 4:42 AM ETDexCom, Inc. (DXCM)AAPL31 Comments
Daniel Schönberger profile picture
Daniel Schönberger


  • Over the next few quarters, Dexcom could profit from the possibility to link Dexcom sensors with the Apple Watch.
  • But over the long timeframe, Dexcom investors have to watch Apple very closely and take the possibility of Apple introducing their own non-invasive CGM system as a serious threat.
  • Even without new competition from Apple, Dexcom still seems to be overvalued.

Usually, continuous glucose monitoring (CGM) is nothing that gets much attention, but in the last few weeks, there has been some information regarding the medical device company Dexcom (NASDAQ: NASDAQ:DXCM) that is focusing on such CGM systems and the tech giant Apple (NASDAQ: AAPL). A few weeks ago there were rumors that Tim Cook was wearing a modified version of the Apple Watch with the ability to continuously measure blood sugar levels in a non-invasive way. Very recently Apple also announced at its WWDC that the next Apple Watch will link wirelessly to Dexcom’s glucose sensor.

While the wireless connection of Dexcom’s sensors to Apple’s Watch can be interpreted as good news (the stock spiked more than 6% that day), the outlook of Apple developing its own non-invasive glucose monitoring system is certainly not good news. Reason enough to analyze Dexcom once again. The article will be split in three major parts. In the first section, we will look at the positive effects the wireless connection of Dexcom’s and Apple’s products can have; in the second part, we will take a closer look at the potential danger of Apple introducing its own CGM system. Finally, we end with an intrinsic value calculation to determine if an investment in Dexcom makes sense.

Synthesis with Apple?

For the next few quarters, it is not unlikely that Dexcom could profit from the wireless link between their sensor and the Apple Watch as this could be a boost for their own revenue. There are a few reasons, why it could have a positive effect:

  • Usually, patients using the CGM system need three components – a sensor, which has to be replaced every week, a transmitter that has to be replaced about 2-4 times a year and the Dexcom receiver. Of the three components, the receiver is the most expensive (although it only

This article was written by

Daniel Schönberger profile picture
Part-time investor and contributor for Seeking Alpha since 2016. My analysis is focused on high-quality companies, that can outperform the market over the long-run due to a competitive advantage (economic moat) and high levels of defensibility. Focused on European and North American companies, but without constraints regarding market capitalization (from large cap to small cap companies). My academic background is in sociology and I hold a Master’s Degree in Sociology (with main emphasis on organizational and economic sociology) and a Bachelor’s Degree in Sociology and History.I also write about investing, economy and similar topics on Medium: https://medium.com/@danielschonberger

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

All charts are - if not stated otherwise - my own work. All numbers are taken from Dexcom' s SEC filings and from Morningstar.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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