DexCom Stock Faces Near-Term Pullback Despite Beating Revenue Consensus

DexCom, Inc. (DXCM) delivered stronger-than-expected preliminary results for Q4 and full-year 2025, yet the market responded with a 2.5% decline following Monday’s announcement. The disconnect between solid operational performance and stock weakness highlights investor concerns about valuation rather than fundamentals. The company will publish complete fourth-quarter earnings on February 12, 2026.

Beating the Street on Q4 Revenue, Missing on Guidance Nuance

DexCom’s preliminary Q4 2025 revenue reached $1.26 billion, surpassing the Zacks Consensus Estimate of $1.25 billion and marking 13% year-over-year growth from 2024. This comprised $892 million in domestic sales (up 11% YoY) and $368 million internationally (up 18% YoY). The revenue beat demonstrates sustained demand for continuous glucose monitoring (CGM) products, even as the company navigates manufacturing headwinds.

Full-Year 2025: Revenue Acceleration with Strategic Margin Management

For the complete 2025 fiscal year, DexCom projects total revenues of $4.66 billion, exceeding the consensus expectation of $4.64 billion and reflecting 16% annual growth. More significantly, the company achieved an adjusted gross profit margin of approximately 61% and an adjusted operating margin of 20-21%.

The margin expansion narrative proves critical for understanding DXCM’s operational efficiency. Despite gross margin pressure from elevated manufacturing scrap rates and freight costs in Q3, opex leverage across the organization offset these headwinds, enabling year-over-year margin expansion. Management expects scrap normalization to provide additional tailwinds and reaffirmed confidence in long-term gross margin improvement through manufacturing optimization, complaint rate reduction, and the higher-margin G7 15-day system rollout.

2026 Outlook: Double-Digit Growth Amid Margin Expansion

Looking forward, DexCom projects 2026 revenues between $5.16-$5.25 billion, representing 11-13% growth over 2025. The company anticipates adjusted gross margin improving to 63-64% and operating margin reaching 22-23%—a meaningful step-up reflecting both opex discipline and manufacturing improvements taking hold.

This guidance assumes accelerating CGM adoption, international market expansion, Stelo product contribution, and broader industry tailwinds. The G7 15-day system is positioned to be a meaningful margin contributor beginning in 2026 and beyond, suggesting operating leverage will continue improving as this higher-margin product gains traction.

Stock Performance and Valuation Context

Over the trailing three months, DXCM has gained 3.6% compared to a 6.3% industry rise and the S&P 500’s 5.2% appreciation, underperforming its healthcare peer set despite solid execution. The recent post-earnings pullback, despite revenue beats, suggests the market may be recalibrating growth expectations or pricing in near-term competitive dynamics.

Investment Perspective

DexCom carries a Zacks Rank #3 (Hold), reflecting balanced risk-reward at current valuations. The company’s ability to deliver revenue growth above 10% while expanding operating margins simultaneously demonstrates operational maturity. However, investors should monitor Q1 2026 execution on the G7 15-day launch and whether the company can sustain the opex discipline that drove 2025 performance into the forward period.