Since last October, there has been a marked reduction in fears about the sales of diabetes drugs dropping as a result weight-loss drugs. That’s because Dexcom (NASDAQ:DXCM) delivered stronger-than-expected third-quarter results in October. And during its Q3 earnings call, Dexcom actually reported that when diabetes patients are on the GLP-1 drugs, their demand for glucose monitors tend to rise. Dexcom and other diabetes stocks advanced significantly over the subsequent six months or so, but they have pulled back in recent weeks. With the market for diabetes treatments expected to soar to $223 billion by 2032, up from $89.2 billion in 2022, according to one estimate, I believe that the pullback of names in the space has created an excellent buying opportunity for long-term investors. Here are the three best diabetes stocks to buy now.
Tandem Diabetes Care (TNDM)
On May 22, Citi raised its rating on Tandem Diabetes Care (NASDAQ:TNDM) to “buy” from “neutral.” The bank is bullish on the company’s new insulin delivery system, called Mobi. Specifically, Citi reports that the early adoption of the product is exceeding the Street’s expectations.
The bank also noted that the company’s sales climbed a better-than-expected 12% last quarter versus the same period a year earlier, and Citi believes that the company’s guidance for a 12% increase in sales this year is conservative. Finally, the bank thinks that the upcoming integration of Tandem’s products with those of Dexcom could provide a positive catalyst for TNDM stock.
Investor’s Business Daily gives TNDM stock a high accumulation/distribution grade of A-, indicating that many institutional investors have bought the stock over the last 13 weeks. Additionally, the shares have an elevated relative strength score of 96, suggesting that they have outperformed a great deal over the last year.
Tandem’s many positive attributes make it one of the best diabetes stocks to buy.
Insulet Coporation (PODD)
Redburn Atlantic, the equity research unit of Rothschild & Co, recently launched coverage of Insulet Corporation (NASDAQ:PODD) stock with a “buy” rating. Insulet develops and markets insulin delivery systems for diabetes patients.
Redburn Atlantic expects the insulin pump market to expand at a CAGR of 13% between 2023 and 2028. After conducting a survey of endocrinologists, it reports that 76% of the doctors said that they are likely or very likely to recommend Insulet’s flagship product, the Omnipod 5 pump, for patients who use large amounts of insulin. Redburn placed a $235 price target on PODD stock.
Analysts, on average, expect Insulet’s earnings per share to surge to $3.73 in 2025 from $3.08 this year.
Last quarter, the company’s operating income jumped 52% versus the same period a year earlier to $56.9 million.
Dexcom (DXCM)
After conducting a survey of 50 endocrinologists, Wells Fargo expects Dexcom’s (NASDAQ:DXCM) weighted average share of the continuous glucose monitor market to rise from 55% in 2023 to 57% in 2024 and 58% in 2025.
Moreover, the bank expects Dexcom, along with Insulet and Tandem, to be boosted by increased use of continuous glucose monitors and insulin pumps.
On March 12, RBC Capital started coverage of DXCM stock with an “outperform” rating. The bank believes that the total addressable market for continuous glucose monitors is increasing. Specifically, RBC says that the use of monitors is low among patients with certain types of diabetes and that Dexcom’s penetration among these groups can increase significantly. RBC Capital believes that Dexcom is poised to be among the fastest-growing large-cap MedTech companies.
Last quarter, Dexcom’s bottom line nearly tripled to $146.4 million, versus $48.6 million during the same period a year earlier. Its revenue advanced 24% year-over-year to $921 million.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
