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I last wrote about Quidel (QDEL - Free Report) as the Bear of the Day on April 30 right before their quarterly report on May 6 that may have helped put a bottom in shares near $100.
But the reason that QDEL remains a Zacks #5 Rank is due to the new round of downward EPS revisions by Wall Street analysts.
In just the past few weeks since that report, the full-year consensus for 2021 has dropped a whopping 30% from $23.22 to $16.28.
And prior to the company's Q1 earnings miss and reality-check, that profit projection stood at $28.15.
Why Were Investors and Analysts So Surprised?
Quidel is a $5 billion maker of medical diagnostics that vaulted to unprecedented success during the height of demand for COVID-19 testing kits.
Quidel discovers, develops, manufactures and markets point-of-care, rapid diagnostic tests for detection of medical conditions and illnesses. These products provide accurate, rapid and cost-effective diagnostic information for acute and chronic conditions that affect women's health throughout the phases of their lives including reproductive status, pregnancy management and osteoporosis.
Quidel also provides point-of-care diagnostics for infectious diseases, including influenza A and B, strep throat, H. pylori infection, chlamydia and infectious mononucleosis.
Sales vaulted over $1 billion -- nearly 200% -- last year for their rapid COVID-19 test.
Here's what I wrote in April...
And I was one investor who was captivated by the story, believing that not only would such testing demand persist but also that the new influx of cash flow would enable this small company to expand many of its R&D and product avenues in diagnostics.
In fact, we took gains of 64% and 48% in the past few quarters riding the wave of demand for testing, and buying the dips when others doubted the sustainability of those sales.
But the fable would not last. And as much as I wanted to believe in the $5 billion company sustaining a new valuation above $10 billion, the revenue growth disappointments from the company and the downward estimate revisions from analysts kept coming in.
In the past few months, the EPS consensus among four Wall Street analysts covering the company has dropped 33% from $39 to $26.
(end of excerpt from my April article)
While many investors (myself included) believed that COVID-19 testing would be a constant part of our lives as travel and shopping attempted a return to normal this spring, the spike in QDEL sales led to a hard reversal.
Current top-line estimates are for an 11% drop to $1.5 billion this year and another 23.5% decline to $1.13B next year.
QDEL remains an innovative diagnostics company with BIG potential for M&A/partnership interest from Big Pharma. But until the estimates stop going down, and start heading back up, the stock is still untouchable.
The Zacks Rank will let you know.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is "Will you get into the right stocks early when their growth potential is greatest?"
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Image: Bigstock
Bear of the Day: Quidel (QDEL)
I last wrote about Quidel (QDEL - Free Report) as the Bear of the Day on April 30 right before their quarterly report on May 6 that may have helped put a bottom in shares near $100.
But the reason that QDEL remains a Zacks #5 Rank is due to the new round of downward EPS revisions by Wall Street analysts.
In just the past few weeks since that report, the full-year consensus for 2021 has dropped a whopping 30% from $23.22 to $16.28.
And prior to the company's Q1 earnings miss and reality-check, that profit projection stood at $28.15.
Why Were Investors and Analysts So Surprised?
Quidel is a $5 billion maker of medical diagnostics that vaulted to unprecedented success during the height of demand for COVID-19 testing kits.
Quidel discovers, develops, manufactures and markets point-of-care, rapid diagnostic tests for detection of medical conditions and illnesses. These products provide accurate, rapid and cost-effective diagnostic information for acute and chronic conditions that affect women's health throughout the phases of their lives including reproductive status, pregnancy management and osteoporosis.
Quidel also provides point-of-care diagnostics for infectious diseases, including influenza A and B, strep throat, H. pylori infection, chlamydia and infectious mononucleosis.
Sales vaulted over $1 billion -- nearly 200% -- last year for their rapid COVID-19 test.
Here's what I wrote in April...
And I was one investor who was captivated by the story, believing that not only would such testing demand persist but also that the new influx of cash flow would enable this small company to expand many of its R&D and product avenues in diagnostics.
In fact, we took gains of 64% and 48% in the past few quarters riding the wave of demand for testing, and buying the dips when others doubted the sustainability of those sales.
But the fable would not last. And as much as I wanted to believe in the $5 billion company sustaining a new valuation above $10 billion, the revenue growth disappointments from the company and the downward estimate revisions from analysts kept coming in.
In the past few months, the EPS consensus among four Wall Street analysts covering the company has dropped 33% from $39 to $26.
(end of excerpt from my April article)
While many investors (myself included) believed that COVID-19 testing would be a constant part of our lives as travel and shopping attempted a return to normal this spring, the spike in QDEL sales led to a hard reversal.
Current top-line estimates are for an 11% drop to $1.5 billion this year and another 23.5% decline to $1.13B next year.
QDEL remains an innovative diagnostics company with BIG potential for M&A/partnership interest from Big Pharma. But until the estimates stop going down, and start heading back up, the stock is still untouchable.
The Zacks Rank will let you know.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is "Will you get into the right stocks early when their growth potential is greatest?"
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>