1 Growth Stock Down 19% to Buy Right Now

Last year was not a good one for Dexcom (NASDAQ: DXCM). The medical device specialist lagged the market, and even with a bit of a rebound toward the second half of 2025, shares are down 19% over the trailing-12-month period. However, there are still great reasons to consider investing in Dexcom.

Let's see why the healthcare company could be a great buy.

Putting the challenges in context

Dexcom is a medical device specialist that manufactures and markets continuous glucose monitoring (CGM) devices, which help diabetes patients track their blood sugar levels throughout the day. Last year, the company faced the ire of regulators and complaints from some of its customers because some of its CGM receivers were defective. The receivers' speakers malfunctioned and failed to audibly alert patients of critically low (or high) blood sugar. Dexcom faced a Class 1 recall for 602,445 of its G7 receivers.

Image source: Getty Images.

However, this doesn't mean that many receivers were actually defective -- recalls can happen out of an abundance of caution even in the absence of evidence of malfunction. Further, many patients skip the receiver altogether and use a mobile app that does the same job. Meanwhile, Dexcom's revenue and earnings grew at a healthy clip throughout the year, indicating that despite this problem, demand for the company's products remains strong.

In the third quarter, Dexcom's revenue increased by 22% year over year to $1.2 billion, while its adjusted earnings per share came in at $0.61, up 35.6% compared to the year-ago period. Importantly, Dexcom ended 2024 with about 2.8 million to 2.9 million customers, a number that almost certainly grew throughout 2025. The company said last year that the actual number of complaints it had received over this problem was 112 as of June. Although we shouldn't ignore those who were actually affected by this issue, it's worth noting that it represents a pretty small percentage of Dexcom's installed base.

A massive growth runway

Dexcom is one of the leaders in the CGM market, and the company has plenty more growth fuel available. The company has historically targeted patients with type 1 diabetes or those with type 2 who are on intensive insulin therapy. That's largely because these populations benefited the most from CGM devices, and insurance coverage has come more easily for them. However, even within this core U.S. market, there remains a large addressable market.

Dexcom estimated that some 4.5 million diabetes patients on insulin benefit from CGM coverage but have yet to opt for the technology. Further, Dexcom has expanded its addressable market. Third-party coverage -- even outside of its original target market -- continues to grow, while new launches are also helping the medical device specialist. In 2024, it earned approval for Stelo, an over-the-counter CGM option for patients, including those who aren't on insulin and people with prediabetes, in the U.S.

Given Dexcom's strong financial results, leading technology, and vast market, the company could rebound and perform well over the long run, making it an attractive stock to buy today.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends DexCom and recommends the following options: long January 2027 $65 calls on DexCom and short January 2027 $75 calls on DexCom. The Motley Fool has a disclosure policy.