Here's Why Dexcom (DXCM) Traded Down in Q3

Sands Capital, an investment management company, released its “Sands Capital Select Growth Strategy” Q3 2025 investor letter. A copy of the letter can be downloaded here. U.S. large-cap growth equities continued to recover from a sharp sell-off in early April. Strong corporate earnings, investor enthusiasm around artificial intelligence (AI), and growing expectations for Federal Reserve policy easing drove the robust gains. The portfolio returned 6.3% (net) in the quarter, compared to the benchmark's 10.5% gain. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its third-quarter 2025 investor letter, Sands Capital Select Growth Strategy highlighted stocks such as DexCom, Inc. (NASDAQ:DXCM). DexCom, Inc. (NASDAQ:DXCM) is a medical device company that develops and commercializes continuous glucose monitoring (CGM) systems. The one-month return of DexCom, Inc. (NASDAQ:DXCM) was -8.29%, and its shares lost 19.94% of their value over the last 52 weeks. On November 24, 2025, DexCom, Inc. (NASDAQ:DXCM) stock closed at $62.53 per share, with a market capitalization of $24.52 billion.

Sands Capital Select Growth Strategy stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its third quarter 2025 investor letter:

"DexCom, Inc. (NASDAQ:DXCM) is a leading producer of glucose monitors for diabetes management. Shares declined during the quarter, pressured by broader weakness in the medical devices industry and heightened FDA and customer scrutiny of product reliability. Despite these external pressures, Dexcom continues to execute well following its mid-2024 operational challenges. The second quarter marked its third straight quarter of accelerating year over-year revenue growth, supported by near-record new patient additions. While management raised 2025 revenue guidance, the increase was more cautious than consensus expected, disappointing investors. We believe this conservative stance creates room for upside in the second half of 2025. Dexcom ended the quarter trading near its all-time low forward earnings multiple, which we view as a disconnect from its growth outlook. Potential catalysts include strong adoption of its newly launched 15 day sensor, expanded Medicare coverage for type-2 non insulin patients, and clarity on the company's long-range plan. We expect margin leverage from the 15-day sensor should also contribute meaningfully to profitability in 2026."

DexCom, Inc. (NASDAQ:DXCM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 60 hedge fund portfolios held DexCom, Inc. (NASDAQ:DXCM) at the end of the second quarter, the same as in the previous quarter. For the third quarter of 2025, DexCom, Inc. (NASDAQ:DXCM) reported global revenue of $1.21 billion, compared to $994 million in the third quarter of 2024. While we acknowledge the potential of DexCom, Inc. (NASDAQ:DXCM) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered DexCom, Inc. (NASDAQ:DXCM) and shared Carillon Eagle Mid Cap Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.