Oppenheimer analyst Steven Lichtman reiterated the Outperform rating on DexCom, Inc. (NASDAQ:DXCM), with a reduced price target of $122 from $150.

With an underpenetrated patient population and robust pipeline, Lichtman forecasts strong sales growth over the next several years for DexCom. 

For '24E, Lichtman forecasts 22% sales growth on the annualization of the G7 U.S. launch, expanded CMS T2 coverage, and OUS expansion.

DexCom reported earnings of 50 cents per share, which beat the estimate of 34 cents. It clocked revenue of $975 million, compared to the $939.2 million estimate, growing 27% year-over-year.

The analyst writes that the quarter saw building momentum for two U.S. drivers: the G7 launch and increasing penetration of basal-only T2 following CMS coverage expansion last spring. 

These remain near-term drivers with a new U.S. opportunity: a 15-day sensor for non-insulin T2 (lower price). 

The company's '23 sales guidance raised to +23–24% y/y along with operating margin (19% from 17%). 

The key drivers in the guidance raise include global G7 rollout, Dexcom ONE expansion into new geographies, Type 2 basal momentum building, and solid opex leverage. 

In a solid cash position, management announced a $500 million share repurchase program and reiterated CGM/ GLP-1s synergies. 

The analyst's estimate for 2023 sales rose to $3.59 billion (+23.4% y/y) from $3.534 billion on a 3Q beat and raised guidance.

While competition remains stiff, particularly from Abbott Laboratories (NYSE:ABT) Libre, new market opportunities continue to build, Lichtman adds.

Price Action: DXCM shares are trading higher by 10.24% to $89.39 on the last check Friday.