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The Virus Testing Stocks Pullback Opportunity (CODX, FLGT, ALST, LH)

The world exploded with a cheer of joy on Monday of this week as Pfizer put out extremely encouraging news about its top coronavirus vaccine candidate, noting that it registered a 90% efficacy rate with no complications in its phase 3 study involving over 43K patients.

Stocks took flight, bonds dropped, and small-caps and cyclicals massively outperformed tech stocks as the prospect of a reopening of the economy surged through the cyclical side of the market.

However, as we are learning, the story isn’t quite so simple. According to many experts, don’t expect to get your vaccine shot tomorrow. Or next week. Or next month. Or next quarter. In fact, according to Andrew Cuomo, NY governor, it may be late next year before most of us end up with access to the protective biological solution.

In the meantime, the virus is devastating the northern hemisphere, with cases now well above what we saw in the spring on a nominal and percentage basis, daily.

With that in mind, we take a look at several very interesting names in the coronavirus testing space as the world comes to rely more heavily than ever on diagnostics in the absence of clear solutions on the treatment side, including: Co-Diagnostics, Inc. (NASDAQ:CODX), Fulgent Genetics Inc (NASDAQ:FLGT), Allstar Health Brands Inc (OTCMKTS:ALST), and Laboratory Corp of America Holdings (NYSE:LH).

 

Co-Diagnostics, Inc. (NASDAQ:CODX) develops, manufactures and markets a state-of-the-art diagnostics technology. The Company’s technology is utilized for tests that are designed using the detection and/or analysis of nucleic acid molecules (DNA or RNA). The Company also uses its proprietary technology to design specific tests to locate genetic markers for use in industries other than infectious disease and license the use of those tests to specific customers.

The company intends to manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules. It also intends to sell diagnostic equipment from other manufacturers as self-contained lab systems.

Co-Diagnostics, Inc. (NASDAQ:CODX) recently announced that following the discovery of an incorrectly recorded expense in the period ending June 30, 2020, Management will be amending its June 30, 2020 Form 10-Q by filing Amendment No. 1 on Form 10-Q/A with the Securities and Exchange Commission (“SEC”) to show an increase in basic and diluted net income per common share of $0.08 as of and for the three and six months ended June 30, 2020.

According to the release, the increased net income per common share will be $0.51 as reflected in the amended 10-Q, which the Company plans to file prior to the filing of its Quarterly Report on Form 10-Q for Q3 2020. The information included in this announcement will be simultaneously disclosed in Form 8-K filed with the SEC.

The stock has suffered a bit of late, with shares of CODX taking a hit in recent action, down about -16% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%.

Co-Diagnostics Inc (NASDAQ:CODX) managed to rope in revenues totaling $24M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 38942.9%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($18.6M against $3M).

 

Fulgent Genetics Inc (NASDAQ:FLGT) provides genetic testing services to physicians with clinically actionable diagnostic information. Its technology platform integrates data comparison and suppression algorithms, adaptive learning software, and genetic diagnostics tools and integrated laboratory processes.

The company primarily serves hospitals and medical institutions. It sells its tests through internal sales force, as well as through independent sales representatives in the United States and internationally.

Fulgent Genetics Inc (NASDAQ:FLGT) most recently announced financial results for its third fiscal quarter ended September 30, 2020. Third quarter revenue was $101.7 million, an increase of 883% from $10.3 million in the third quarter of 2019. GAAP income for the third quarter of 2020 was $46.6 million, or $1.98 per share, and non-GAAP income was $49.0 million, or $2.08 per share.

Ming Hsieh, Chairman and Chief Executive Officer, said, “I am very pleased with our outstanding third quarter results, which demonstrate the true scalability of our technology platform for genetic testing. As the COVID-19 pandemic continues to threaten both our health and our way of life, we have been relentless in scaling our testing capabilities to offer fast, accurate and reliable COVID-19 testing solutions for commercial organizations, municipalities, universities and individuals across the country. Our recent momentum is a result of the investments we have made in our business and technology platform over many years. We expect to continue investing in our platform to expand our capabilities as we look to capture share in the broader genetic testing market in the future. In addition to our technology investments, we believe the relationships we have built during this pandemic from both a customer and reimbursement standpoint, along with the expansion of our commercial capabilities which includes our at-home platform, Picture Genetics, will help drive our business in the years ahead.”

The stock has suffered a bit of late, with shares of FLGT taking a hit in recent action, down about -7% over the past week.

Fulgent Genetics Inc (NASDAQ:FLGT) managed to rope in revenues totaling $17.3M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 105%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($21M against $6.5M).

 

Allstar Health Brands Inc (OTCMKTS:ALST) is perhaps the most interesting name here because it hasn’t priced in anything here and has a very interesting and unique angle on providing much-needed testing solutions.

This is a specialty pharmaceutical and nutritional supplements company. One of its core assets at this point is its partnership with TPT Global Tech, a technology and solutions company. The two companies are collaborating to create and distribute the QuickLAB module, a rapid testing solution for Covid-19. The two companies had already recently signed an agreement for Mexico and other Latin American countries through TPT Global Tech’s partner New Orbit Technologies. Now, they have signed an expanded agreement to bring QuickLAB distribution to Canada and US to add to the existing Non-Exclusive Distribution Agreement for Mexico and other Latin American countries.

Allstar Health Brands Inc (OTCMKTS:ALST) most recently announced an update on its diverse lines of business, including its latest efforts in the battle against the novel coronavirus SARS-CoV-2, the virus that causes COVID-19. AllStar Health Brands is seeing growing adoption and uptick in interest from current and new end-users for its diagnostic test kits for COVID-19, both for its antibody and its PCR tests, expecting an upward trend in sales in 2020 and 2021. Additionally, the Company is seeking to expand into the antigen test market.

“We’re unfortunately seeing rapid spreading of the coronavirus, with 42 states showing increases last week compared to prior week,” said Dr. Daniel Bagi, President of AllStar Health Brands. “Diagnosing the virus as quickly and as efficiently as possible will be a critical element to fighting this, particularly as a viable vaccine or therapeutic treatment appears to still be many months away from being broadly available to the general public.”

Allstar Health Brands Inc (OTCMKTS:ALST) generated sales of $178K, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 224.2% on the top line. ALST is surely a more speculative name on this list. But with the company’s recent expansion and partnership, it may also be the most underpriced.

 

Laboratory Corp. of America Holdings (NYSE:LH) is another stock that has started to power higher over recent days as headlines about a coming pick-up in Covid-19 data begin to circulate ahead cold and flu season.

The company offers clinical laboratory tests, such as blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, Pap tests, hemoglobin A1C and vitamin D products, prostate-specific antigens, tests for sexually-transmitted diseases, hepatitis C tests, microbiology cultures and procedures, and alcohol and other substance-abuse tests. Most importantly for this analysis, it is also a key player in Covid-19 testing.

Laboratory Corp. of America Holdings (NYSE:LH) most recently announced the launch of the first testing method to simultaneously detect COVID-19, influenza A / B, and respiratory syncytial virus (RSV). According to the release, the single-panel test, which detects multiple types of infections, can help doctors diagnose patients and make decisions about treatment options. The test is available to patients through doctors, hospitals, and other authorized healthcare providers nationwide. LabCorp has also applied to the U.S. Food and Drug Administration (FDA) to offer the combined test through its Pixel by LabCorp™ at-home test collection kit, which would offer added convenience and accessibility.

“The U.S. is facing the most challenging health crisis in a century and is about to enter flu season, which has the potential to put additional strain on our healthcare system and cost lives,” said Dr. Brian Caveney, chief medical officer and president of LabCorp Diagnostics. “Individuals infected with COVID-19, influenza A / B, or RSV, often experience similar symptoms of cough, fever, chest tightness, and body aches, providing a potential surge of patients seeking testing. Leveraging our scientific and technological expertise to simultaneously test for four major respiratory viruses, including COVID-19, will provide doctors a simple, efficient way to diagnose their patients.”

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action LH shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -4% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Shares of the stock have powered higher over the past month, rallying roughly 4% in that time on strong overall action.

Laboratory Corp. of America Holdings (NYSE:LH) generated sales of $3.9B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 40.7% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($667.2M against $3B, respectively).



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