We recently published a list of the 10 Worst Performing Stocks in S&P 500 in 2024. In this article, we are going to take a look at where DexCom, Inc. (NASDAQ:DXCM) stands against other worst performing S&P 500 stocks in 2024.
Since 2023, the market has experienced extended winning streaks, reflecting the economy’s resilience. The most recent rally stretched six consecutive weeks but finally came to an end between October 21 and 25, marking the first week in six to close with a loss.
Nevertheless, the tech sector still closed with small gains as it was led by Tesla after its strong earnings. Despite that, now some experts in the market are trying to broaden their investments as they see uncertainty in the coming months, mainly due to the election and geopolitical reasons.
READ NEXT: 10 Best-Performing S&P 500 Stocks in the Last 3 Years and 10 Worst Performing Dow Stocks Year-to-Date.
A New Investment Approach Favoring Value Over Tech in Uncertain Times
James Cakmak, Chief Investment Officer at Clockwise Capital, detailed his recent shift from the tech-heavy Mag7 stocks into more diverse, value-focused sectors. Initially long on tech, Cakmak’s strategy changed due to heightened risks related to the election, geopolitical tensions, and economic cycles. While tech had seen significant growth, he felt it was essential to seek other opportunities for “alpha” as the market evolved.
Cakmak explained that Clockwise Capital has moved funds into undervalued sectors, such as automotive and metals, as well as smaller, less mainstream software companies.
Addressing inflation, Cakmak stressed the importance of keeping metals as a hedge. With inflation still showing signs of persistence and the Fed adjusting its rate cut expectations, he sees value in maintaining assets that traditionally perform well during inflationary periods, including gold.
Finally, he highlighted his commitment to semiconductors as a long-term investment theme, acknowledging their volatility but affirming their relevance in driving automation and productivity.
If we talk about other opportunities in the market, Goldman Sachs is bullish on undervalued quality growth stocks and cyclical value stocks as discussed by Christian Mueller-Glissmann from Goldman in a CNBC interview. We talked about it in our article: 12 Most Profitable Growth Stocks To Invest In. Here is an excerpt from it:
“Mueller-Glissmann highlighted two key reasons for not expecting a major market decline: inflation has significantly dropped, giving central banks more flexibility, and price momentum over the past 6-12 months suggests a strong macroeconomic backdrop. With the labor market improving, he sees no signs of an economic downturn.
His strategy focuses on quality growth stocks that are temporarily undervalued and cyclical value stocks that could recover as the market stabilizes.”
Our Methodology
For this article, we checked the performance of the S&P 500 stocks and picked out the 10 stocks with the highest share price decline, as of October 24. The stocks are listed in descending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is DexCom, Inc. (NASDAQ:DXCM) The Worst Performing S&P 500 Stock In 2024?
DexCom, Inc. (NASDAQ:DXCM)
Number of Hedge Fund Holders: 64
Year-to-Date Share Price Performance: -39.19%
DexCom, Inc. (NASDAQ:DXCM) is a medical device company specializing in continuous glucose monitoring (CGM) systems for diabetes management, both in the U.S. and internationally. Its main products include the Dexcom G6 and G7 CGM systems, the Dexcom Share remote monitoring system, and the Dexcom Real-Time API for integrating CGM data into health apps. The company also offers Dexcom ONE, which replaces traditional finger-stick blood glucose testing.
DexCom (NASDAQ:DXCM) faced a major sell-off after it reported Q2 earnings in July as its stock price dropped over 40% between July 25 and 26. In its second-quarter 2024 investor letter, Ithaka Group said that while the company reported a strong quarter that exceeded analyst expectations, the company’s stock price declined likely due to failing to meet high investor expectations after several quarters of significant growth.
Moreover, its earnings report revealed a decline in both customer numbers and revenue per customer. CEO Kevin Sayer explained that the downturn was partly due to a restructuring of the U.S. sales force following the launch of the over-the-counter Stelo device. He also noted an unexpected surge in rebate eligibility for the G7 continuous glucose monitor, which occurred at a rate three times faster than anticipated.
DexCom (NASDAQ:DXCM) reported its Q3 earnings on October 24. It posted an EPS of $0.45, exceeding expectations by $0.02, and its revenue of $994 million showed a slight increase from the previous year and outperformed the estimates by $3.01 million.
Its U.S. revenue saw a 2% decline due to shifting channel dynamics. International markets performed well, especially in Japan and Europe. The company maintained its 2024 revenue guidance of $4 billion to $4.05 billion, with a continued focus on improving sales productivity and navigating market challenges.
After the earnings, Canaccord Genuity analyst William Plovanic reiterated a Buy rating on DexCom (NASDAQ:DXCM) stock with a price target of $89. He mentioned strong international sales that outperformed expectations and contributed to overall revenue growth, despite a decline in U.S. revenue. The record new patient starts in Q3 suggest a promising future for recurring revenue. Plovanic views the challenges related to G7 rebates and distribution changes as temporary and manageable, with expected benefits from new patient starts in the near future.
Artisan Partners stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its Q3 2024 investor letter:
“Among our top detractors were DexCom, Inc. (NASDAQ:DXCM), iRhythm and Celsius. Dexcom is the leader in continuous glucose-monitoring (CGM) systems. With data increasingly supporting the clinical and economic case for CGMs, we believe Dexcom is well positioned to further penetrate the Type 1 diabetes market and to drive adoption in the much larger Type 2 diabetes market. Unfortunately, financial results showed meaningful growth deceleration, and shares responded accordingly. The company pointed to several causes for the surprising slowdown, most of which were execution related (e.g., sales force changes and distribution channel mismanagement) in the context of healthy industry trends. While we continue to believe in the case for CGMs and Dexcom’s technology, the lack of execution is concerning. We believe these operational mistakes will take time to fix, and we reduced our position.”
Overall, DXCM ranks 8th on our list of worst performing stocks in the S&P 500. While we acknowledge the potential of DXCM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DXCM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.