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Dexcom Tanks on Profit Booking after Directors Increase Stakes

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Market updates

The markets took a break from their bullish stance and were trading sideways on May 26, 2016. The Dow Jones Industrial Average closed down at 0.1%, and the SPDR S&P 500 ETF (SPY) remained stagnant. The big positive for the market has been that oil is trading above the $50.0 mark. The iShares U.S. Medical Devices ETF (IHI) closed at $130.75 and went down marginally by 0.1%, but IHI is up by 6.8% on a year-to-date basis.

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Dexcom tanks

Dexcom (DXCM) was the worst-performing stock within the iShares U.S. Medical Devices ETF (IHI) on May 26, 2016. The stock went down by 3.3% on profit booking. Trading volumes were marginally higher with ~810,000 shares traded as compared to the three-month average trading volume of ~790,000 shares per day.

Dexcom was in the news, as it increased its holdings in the latest Form 4 filings with the Securities Exchange Commission (or SEC). In a recent press release, Dexcom announced that it will present a company update at the 2016 Jeffries Healthcare Conference in New York on June 7, 2016. Dexcom closed at $63.15 and was trading above the 20-day moving average price of $63.0. The stock has fallen by 22.9% on a year-to-date basis.

The company’s relative strength index (or RSI) is at 55, indicating that the stock is neither overbought nor oversold. Dexcom’s 52-week low is $47.92, and its 52-week high is $103.29. Dexcom has a book value of $2.77 per share. At its current price, the stock is trading at a price-to-book value of ~22.8x, the second highest within IHI after Insulet (PODD) with a price-to-book value of ~63.8x. Dexcom has a weight of ~1.3% in IHI’s portfolio.

Analysts’ consensus 12-month target price for Dexcom is $88.1. 15 analysts recommend the stock as a “buy,” two analysts recommended a “hold,” and only one analyst has recommended a “sell.”

On the other hand, Cantel Medical (CMN) was the top outperformer within IHI with a gain of 0.9%. The stock recovered from its previous day’s fall and closed at $66.41. It was trading below its 20-day moving average price. However, on a year-to-date basis, the stock is up by 6.9%. As of May 26, 2016, the stock was trading at a 2016 forward price-to-earnings multiple of ~46.1x. Cantel Medical has a book value of $10.25 per share and at its current price, the stock is trading at a price-to-book value of -6.5x. Cantel Medical has a weight of ~0.7% in IHI’s portfolio.

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