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DexCom, Inc. (DXCM) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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DexCom, Inc. (DXCM)

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Intrinsic Value (DCF)

Current$69.24
→
Intrinsic$49.21
-29%
$31.97$49.21$81.91
Market implies 34% growth for 5 years
DXCM trades at a premium to our conservative estimate — investors expect above-average performance.
At $69, the market prices in continued strong cash flow growth (34%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $32 → Bull $82. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$62$67$73$79
10%$42$45$49$53
12%$31$33$36$39
14%$24$26$28$30

Bull Case

  • Bull case ($82) offers 18% upside at 30% growth, 9% discount

Bear Case

  • Bear case ($32) implies 54% downside at 20% growth, 12% discount
  • Price reflects 34% growth expectations vs 25% historical — high bar to clear
  • Trading 29% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$788.38M
Year 2$985.47M
Year 3$1.23B
Year 4$1.54B
Year 5$1.92B
Terminal$28.32B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$630.70MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DXCM stock undervalued or overvalued?
🔴 OVERVALUED

DXCM trades at $69.24 vs. our DCF-derived intrinsic value of $39.94, implying -43% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($62.61) suggests limited upside.

What is DXCM's intrinsic value?

Using a 5-year DCF model: Base FCF of $631M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.98B net debt and dividing by 0.41B shares: Bear $24.54 | Base $39.94 | Bull $62.61. Current price $69.24 implies -43% to base case.

How is DXCM's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($18.46B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.