Why DexCom Stock Dove by 5% Today

What happened

A notable price target cut from an analyst was followed by a dip in the price of DexCom (NASDAQ:DXCM) stock on Friday. Investors traded out of the specialty medical device maker, reducing its value by more than 5%. That was a far steeper decline than the 1.2% slide of the benchmark S&P 500 index.

So what

Raymond James prognosticator Jayson Bedford was the person behind the chop. Before market open, he snipped his DexCom price target to $131 per share from its preceding level of $154. That was the bad news. The good news was that he maintained his strong buy recommendation on the healthcare stock.

Bedford isn't the only analyst who has trimmed his expectations on DexCom lately. Last week, Danielle Antalffy of UBS also lowered her price target significantly, reducing it to $138 from her previous $175. Like Bedford, she remained bullish on the stock, leaving her buy recommendation intact.

In spite of those cuts, optimism is still in the air for DexCom due to the company's position on the market. It is a leader in the lucrative niche segment of continuous blood glucose monitoring. Last last year, it launched a new device, the G7, which it claims is the most accurate monitoring product on the market. It also boasts the fastest warm-up time, according to the company.

Now what

Collectively, the analysts currently tracking DexCom are anticipating growth both this and next year. They're modeling a nearly 22% improvement in revenue for 2023 over the previous year, and an almost 43% leap in per-share profitability. In 2024, those metrics are projected to grow by 20% and 30%, respectively.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.