{"id":62438,"date":"2023-09-18T09:24:17","date_gmt":"2023-09-18T13:24:17","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/will-dexcom-stock-recover-to-its-pre-inflation-shock-highs-of-160\/"},"modified":"2023-09-18T09:24:20","modified_gmt":"2023-09-18T13:24:20","slug":"will-dexcom-stock-recover-to-its-pre-inflation-shock-highs-of-160","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=62438","title":{"rendered":"Will DexCom Stock Recover To Its Pre-Inflation Shock Highs Of $160?"},"content":{"rendered":"
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DexCom stock<\/strong> (NASDAQ
\n NDAQ
\n <\/fbs-ticker>: DXCM) currently trades at $102 per share, about 36% higher than the level seen in early June 2022, just before the Fed started increasing rates, compared to 19% gains for the S&P 500 during this period. The rally in the stock over recent months has been driven by a steady decline in the inflation rate in response to the Fed\u2019s aggressive rate hike plan \u2013 although investors still have concerns about a potential recession. The notable increase in DexCom\u2019s revenues<\/strong> over recent quarters has also contributed to the stock recovery.<\/p>\n

Interestingly, DexCom
\n DXCM
\n <\/fbs-ticker> stock has had a Sharpe Ratio of 0.7<\/strong> since early 2017, higher than 0.6<\/strong> for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3<\/strong> for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.<\/p>\n

Despite its outperformance over the last twelve months or so, DXCM stock is still much lower than its pre-inflation shock high of $163, seen in late 2021. It has seen an 11% decline in the last month or so. This can be attributed to the reduced risk of cardiovascular events for obesity drugs of Novo Nordisk and likely Eli Lilly. Investors are concerned about the possible broader applications of obesity drugs and their impact on medical devices used to manage diabetes.<\/p>\n

Returning to the pre-inflation shock level means that DXCM stock will have to gain more than 60% from here. We believe that will materialize over time. DXCM currently trades at 13x revenues compared to its last five-year average of 21x, implying that the stock is undervalued. Our DexCom Valuation Ratios Comparison<\/strong> dashboard has more details.<\/p>\n

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Our detailed analysis of DexCom\u2019s upside post-inflation shock<\/strong> captures trends in the company\u2019s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock\u2019s performance during the 2008 recession.<\/p>\n

2022 Inflation Shock<\/strong><\/p>\n

Timeline of Inflation Shock So Far:<\/p>\n