New technologies for diabetes treatment are becoming essential for those who suffer from the disease, according to J.P. Morgan, and that could make companies such as Dexcom compelling investment opportunities.
"The diabetes space is currently experiencing its biggest technological wave of innovation from glucose measurement (continuous glucose monitoring) to insulin dosing (insulin pumps)," analyst Robbie Marcus said in a note to clients Friday. "CGM is becoming an essential tool for patients and is now at the level of sensitivity that it is eliminating the need for fingersticks with blood glucose monitoring."
Technological advances for glucose checking are so important, Marcus added, that medical device companies such as Dexcom are set for "significant" upside over the next few years. Marcus upgraded shares of Dexcom to overweight and raised his price target on the company to $115 from $80, implying 28 percent upside over the next year.
Dexcom, which produces devices that attach to a patient's skin to monitor blood-glucose levels continuously, has the potential to crush consensus revenue estimates, the analyst added. He predicts that the San Diego-based company could reach $876 million this year, which would beat expectations of $860 million.