Put a Ring on This Stock Pick — DexCom Inc. (DXCM)

Medical device companies might not sound sexy. But here’s a reason to take note of DexCom, Inc. (NASDAQ: DXCM) — it just landed a huge partnership with Oura Health Ltd., the company behind the ultra-popular health tracking device, the Oura ring. 

Why is this significant? Oura Health is a Finnish health tech company known for making sleek, fitness-tracking rings. The privately held company is forecasting to see its annual sales double to around $500 million this year, with “healthy” growth expected to persist into 2025. 

Now, DexCom, which launched the first over-the-counter CGM system in the United States in August, will merge its tech with Oura to give its users comprehensive health metrics never before seen in a wearable system.

Is DexCom a Buy?

The partnership with Oura could turn out to be a boon for DexCom’s stock. The company has struggled this year, in part due to underwhelming second-quarter results. Despite posting $1 billion in revenue in Q2, a 15% year-over-year jump, results were below analyst forecasts of $1.04 billion. 

As a result, DexCom’s share dropped substantially and remains down nearly 38% year-to-date. However, the magnitude of the drop appears unwarranted, offering a potential discounted entry point to pick up exposure.  

And DXCM’s discounted price isn’t the only reason we like this name. 

Image: DXCM ZenScroe (source: WallStreetZen)

DexCom enjoys an impressive Zen Score of 52, nearly double the industry average of 27. This implies the company has relatively solid fundamentals, especially from a financials perspective, with profit margins up over 6% in the past 12 months alone.

Image: DXCM Analyst Forecast (source: WallStreetZen)

DXCM also enjoys relatively strong analyst backing. Of the 16 analysts that cover the name on WallStreetZen, five rate it a Hold, four rate it a Buy, and seven rate it a Strong Buy. 

Notably, no analysts rate it a Sell or Strong Sell. 

The Bottom Line

DexCom’s partnership with Oura Health has the potential to redefine wearable health technology, offering users unprecedented health insights. While DexCom’s stock has faced significant challenges this year, the pullback could present a compelling entry point for those looking for a piece of the action.

With strong fundamentals, an impressive Zen Score, and solid analyst confidence, DexCom’s collaboration with Oura may mark a turning point for the company’s future growth trajectory.

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