Why DexCom Shares Soared

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical device company DexCom surged 21% today after its quarterly results blew out Wall Street expectations.

So what: DexCom shares have soared over the past year on better-than-expected growth, and today's third-quarter results -- loss of $0.08 was $0.05 better than Wall Street's view, while revenue surged 86% -- only reinforce that positive trend. In fact, the company posted gross margins of 65% in the quarter versus just 40% in the year-ago period, giving analysts plenty of good vibes over its potential profitability.

Now what: Don't expect the operating momentum to slow anytime soon.

"[W]hile we are not formally adjusting our full-year guidance at this time, we are confident that we'll exceed the top end of our current range of $140 million in product revenue," COO Kevin Sayer said in a conference call with analysts.

Of course, with DexCom shares now up 180% over its 52-week lows and trading at a price-to-sales multiple in the mid-teens, much of that confidence might already be baked into the valuation.

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The article Why DexCom Shares Soared originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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