Investors often turn to defensive types of stocks including medical companies in times of market turmoil, but even those can produce mixed results. Take IBD 50 medical products stocks such as Dexcom (DXCM), which has wavered in a buy zone but ultimately slipped below its entry point.
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Select stocks within the medical products and medical systems groups have outperformed the S&P 500’s 5% year-to-date gain. Strong performers include Procept BioRobotics (PRCT), up 18% and Inspire Medical Systems (INSP) rising 13%. Dexcom, meanwhile, has tried to break out, but now has trimmed its 2024 gains to around 5%.
Although these stocks are near buy points and buy zones, breakouts are considered more risky in challenging markets.
Dexcom Stock Retreats From Buy Point
Dexcom stock sank below the 132.03 buy point of a flat base after breaking out on March 6 in heavy volume. The stock found support at its 10-week moving average on Friday.
Shares broke out following news the Food and Drug Administration cleared its newest body-worn glucose monitor for people not requiring insulin treatment. Dexcom stock reclaimed its 10-week line on the jump.
Further, Dexcom exceeded fourth-quarter earnings and sales estimates on Feb. 8. Quarter profits grew 47% following 100% and 79% in the prior two periods. First quarter estimates project a robust 59% profit increase, with slowing growth to follow according to MarketSurge.
Dexcom’s fourth-quarter sales popped 27% for a second straight quarter following a 25% rise. Sales growth is projected at 23% for the first quarter then to slide to 20% in Q2. Full-year 2024 earnings are forecast to rise 16%. Dexcom reports its first quarter earnings results on April 25.
Medical Companies: Inspire Holds Up Best
Inspire Medical Systems is in the 5% buy zone reaching to 237.70 of an early stage cup base. The stock broke out of the base and hit a 226.38 buy point in early April.
Shares then popped nearly 10% in heavy volume on April 17, when JP Morgan stood by Inspire stock after competitor Eli Lilly (LLY) released results that its weight-loss drug significantly reduced nighttime sleep apnea. Inspire makes an implantable sleep apnea device.
Among other medical companies, Procept BioRobotics broke out of a flat base on April 11 and hit a record high 54.50, but the stock retreated below the 52.32 buy point. Shares gave back around 9% from the high and found support at its 10-week line. The company makes a robotic surgical system used in urology surgeries.
Intra-Cellular Therapies (ITCI) broke out of an undefined base on April 16 in huge volume, after news that its drug Caplyta topped expectations in a depression treatment study. Shares reversed sharply lower and fell below the 76.11 buy point two days later. The severe drop in heavy volume triggered sell signals.
A stock that sits with Dexcom in the medical products category, TransMedics Group (TMDX) broke out of a cup base with a 92.63 buy point, but the breakout soon failed. Shares gave back 14% from the breakout peak and are down 9% from the entry, triggering a sell signal. TransMedics specializes in preserving organs used in heart, lung, and liver transplants.
Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.
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