Jim Cramer has voiced concerns over DexCom’s valuation, calling the shares 'too rich' following a significant price rally. The diabetes monitoring company's market capitalization now exceeds $150 billion, prompting scrutiny of its growth sustainability.
- DexCom’s market cap surpassed $150 billion in December 2025
- Price-to-earnings ratio exceeds 65x, well above sector average
- Revenue growth of 22% in Q3 2025 ($942 million)
- Projected 2026 revenue of $1.3 billion (37% growth)
- Mutual fund holdings declined 7% in Q4 2025
- Cramer labeled the stock 'too rich' due to valuation concerns
Jim Cramer has publicly questioned the valuation of DexCom Inc. (DXCM), labeling the stock as 'too rich' in a recent commentary. The warning comes after the company’s share price climbed over 40% year-to-date, pushing its market capitalization past $150 billion as of mid-December 2025. Cramer emphasized that despite strong fundamentals, including consistent revenue growth and expanding international reach, the stock’s current price-to-earnings ratio exceeds 65x, significantly above the sector average for medical technology firms. The concern centers on the sustainability of future earnings growth. DexCom reported third-quarter 2025 revenue of $942 million, up 22% year-over-year, driven by continued adoption of its continuous glucose monitoring (CGM) systems. However, investor expectations appear to have priced in aggressive expansion, including anticipated market entry in emerging economies and integration of AI-powered analytics, which remain unproven at scale. Market analysts note that the stock’s momentum has outpaced broader healthcare sector performance. While the S&P 500 Healthcare Index rose 12% in 2025, DXCM’s gains have been more than three times that. This divergence has led some institutional investors to trim positions, with recent filings showing a 7% reduction in mutual fund holdings over the last quarter. The warning underscores a broader market sensitivity to valuation in high-growth healthcare tech. Investors are now evaluating whether DexCom’s projected 2026 revenue of $1.3 billion—representing 37% growth—can be achieved without margin erosion or increased competitive pressure from companies like Abbott Laboratories (ABT) and Roche (RHHBY).