Diabetes device stocks that have been crushed in recent months by an Ozempic-fueled weight-loss drug frenzy have now been punished enough, some analysts say.
The negativity has been driven largely by the concern that widespread use of GLP-1 drugs like Ozempic and Wegovy will mean less insulin use and more stable blood glucose levels among type 2 diabetes patients, shrinking the market for diabetes devices.
The GLP-1 drugs aren’t as catastrophic for device makers as the share price declines would suggest, some analysts say, in part because the type 1 diabetes market is relatively insulated from the GLP-1 effects, and there’s still plenty of room for growth in the type 2 diabetes market, even as more of these patients start taking Mounjaro and similar treatments.
The pullback in DexCom shares “represents a good buying opportunity,” Oppenheimer analysts wrote in a mid September report, saying use of continuous glucose monitoring should continue to increase. Raymond James analysts also wrote in a mid September report that DexCom is their favorite diabetes play, as continuous glucose monitoring “can cohabitate with GLP-1s” and upward revenue revisions can still drive the stock.