DexCom, Inc. (NASDAQ: DXCM) is having an overwhelmingly rough start to the trading session today, and for good reason. The FDA approved a competitor’s blood glucose monitoring device. Of course, this led to fear among investors, sending the stock tumbling. As is normally the case, our partners at Trade Ideas were the first to alert us to the losses. At the moment (9:59), DXCM is trading at $44.70 per share after a loss of $22.77 per share (33.75%) thus far today.
DXCM Falls Hard On ABT News
As mentioned above, DexCom is having an incredibly rough day in the market today after the FDA approved Abbott Laboratories’ (NYSE: ABT) blood glucose monitoring device. Late yesterday, it was announced that the FDA has approved the device for adults with diabetes. This will ultimately allow millions of adults to track their blood sugar levels without having to use a needle to prick their fingers. So, what’s the deal? Why is this causing DXCM to take a dive?
The answer is actually quite simple. The reality is that DXCM has built a business around glucose monitoring, and there hasn’t been much competition in the space. However, now that ABT has gained approval for their blood glucose monitoring device, not only is there competition in the space, the competition that’s likely to come from this is massive. After all, Abbott has done an incredible job building their business, and they know how to market their products.
Analysts React To The News
As can be expected any time we see big news like this, analysts are already all over the DexCom story. Unfortunately, their views toward DXCM have changed drastically. For example, one of the first analysts to weigh in following the FDA approval was Citigroup. The firm downgraded the stock from an Outperform rating to a Market Perform rating.
However, there are still analysts that see a strong upside. While Wedbush did cut its price target on DXCM, the firm does believe that there is still a strong upside. In their announcement made this morning, Wedbush cut the price target on DexCom from $85 to $76. Based on the previous closing rice of $67.47 per share, that represents an upside of 12.64%.
Nonetheless, regardless of the analysts that believe that there is an upside here, investor fear is running high at the moment as the stock continues to dive. However, as the great Warren Buffet suggests, buying while fear is high can be a great thing. So, this could be presenting an incredible opportunity, especially considering that most analysts still see an upside over yesterday’s closing price.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on DXCM. In particular, we’re interested in following the story surrounding the ABT approval and interested in seeing just how this affects the long-term sales seen at DexCom. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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