Morgan Stanley, Truist Cautious on DexCom (DXCM) Cites Weaker Gross Margins, Modest Q3 Beat

Core Insights - DexCom Inc. is recognized as a strong stock within the QQQ index, despite recent price target reductions by analysts [1][2] - The company reported a significant year-over-year revenue increase, but faced challenges with gross margins [3][4] Financial Performance - DexCom achieved $1.21 billion in worldwide revenue for Q3 2025, reflecting a 22% increase year-over-year and 20% organic growth [3] - The company reported a net income of $242.5 million, translating to an earnings per share (EPS) of $0.61, marking the highest quarterly EPS in its history [3] Margin and Guidance Adjustments - Despite record revenue, DexCom's gross profit margin declined to 61.3% from 63% in Q3 2024, attributed to higher-than-expected scrap rates in manufacturing [4] - The company revised its 2025 non-GAAP gross profit margin guidance to approximately 61% while raising its overall revenue guidance to a range of $4.630 to $4.650 billion [4] Analyst Ratings - Morgan Stanley reduced its price target for DexCom to $63 from $89 but maintained an Overweight rating [1] - Truist lowered its price target to $82 from $94, citing a modest earnings beat and weaker-than-expected gross margins [2]