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Here's Why You Should Retain QuidelOrtho (QDEL) Stock For Now
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QuidelOrtho Corporation (QDEL - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A solid first-quarter 2022 performance, along with a few product launches, is expected to contribute further. However, headwinds due to third-party reimbursement policies and overdependence on diagnostic tests persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 12.2% compared with 22.1% fall of the industry and the S&P 500's 2.6% decline.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $6.36 billion. QuidelOrtho’s earnings yield of 17.7% compares favorably against the industry’s negative yield. QuidelOrtho’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other, the average earnings surprise being 138.3%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about QuidelOrtho’s products, which it currently sells directly to end users and distributors, in each case, for professional as well as individual, non-professional and over-the-counter (“OTC”) use. Recently, the company has begun to reach significant new markets as it introduced its QuickVue At-Home OTC COVID-19 test for reopening schools and many other locations. QuidelOrtho markets its products via a network of distributors and a direct sales force, and operates in one business segment that develops, manufactures as well as markets its products globally.
Product Launch: We are upbeat about a number of product launches by QuidelOrtho over the past few months. During the first-quarter 2022 earnings call in May, the company reconfirmed that it plans to launch the Savanna system in the United States in 2022. QuidelOrtho also confirmed that it intends to submit the Savanna system for emergency use approval for RVP4 in May and to submit 510(k) in July, with two more 510(k) panel submissions set for the end of the year and three more submissions by the end of first-quarter 2023.
Strong Q1 Results: QuidelOrtho’s robust first-quarter 2022 results buoy optimism. The company recorded robust overall top- and bottom-line performances. QuidelOrtho also registered strong Rapid Immunoassay and Specialized Diagnostic Solutions revenues, along with robust demand for COVID-19 and Influenza products. Expansion of adjusted operating margin bodes well for the stock.
Downsides
Third-Party Reimbursement Policies: The end users of QuidelOrtho’s point-of-care products are primarily physicians and other healthcare providers. In the United States, healthcare providers like hospitals and physicians who purchase diagnostic products generally rely on third-party payers (mainly private health insurance plans, federal Medicare and state Medicaid) to reimburse all or part of the cost of procedure. Usage of QuidelOrtho’s products would be adversely impacted if physicians and other healthcare providers do not receive adequate reimbursement for the cost of the same by their patients’ third-party payers.
Overdependence on Diagnostic Tests: A significant percentage of QuidelOrtho’s revenues comes from the sale of COVID-19 and influenza tests, and is expected to remain a significant portion of the company’s total revenues for at least the near future. As a result, if sales or revenues of COVID-19 or influenza tests fall for any reason, the company’s operating results would be adversely affected.
Estimate Trend
QuidelOrtho is witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 6.5% north to $16.78.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $384.1 million, suggesting a 117.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
AMN Healthcare has gained 5.1% against the industry’s 64.2% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.9%. PDCO’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 2.7%.
Patterson Companies has lost 5.7% compared with the industry’s 2.7% fall over the past year.
Masimo, carrying a Zacks Rank #2 at present, has an earnings yield of 3.3% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average beat being 4.4%.
Masimo has lost 33.2% compared with the industry’s 13.5% fall over the past year.
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Here's Why You Should Retain QuidelOrtho (QDEL) Stock For Now
QuidelOrtho Corporation (QDEL - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A solid first-quarter 2022 performance, along with a few product launches, is expected to contribute further. However, headwinds due to third-party reimbursement policies and overdependence on diagnostic tests persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 12.2% compared with 22.1% fall of the industry and the S&P 500's 2.6% decline.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $6.36 billion. QuidelOrtho’s earnings yield of 17.7% compares favorably against the industry’s negative yield. QuidelOrtho’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other, the average earnings surprise being 138.3%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about QuidelOrtho’s products, which it currently sells directly to end users and distributors, in each case, for professional as well as individual, non-professional and over-the-counter (“OTC”) use. Recently, the company has begun to reach significant new markets as it introduced its QuickVue At-Home OTC COVID-19 test for reopening schools and many other locations. QuidelOrtho markets its products via a network of distributors and a direct sales force, and operates in one business segment that develops, manufactures as well as markets its products globally.
Product Launch: We are upbeat about a number of product launches by QuidelOrtho over the past few months. During the first-quarter 2022 earnings call in May, the company reconfirmed that it plans to launch the Savanna system in the United States in 2022. QuidelOrtho also confirmed that it intends to submit the Savanna system for emergency use approval for RVP4 in May and to submit 510(k) in July, with two more 510(k) panel submissions set for the end of the year and three more submissions by the end of first-quarter 2023.
Strong Q1 Results: QuidelOrtho’s robust first-quarter 2022 results buoy optimism. The company recorded robust overall top- and bottom-line performances. QuidelOrtho also registered strong Rapid Immunoassay and Specialized Diagnostic Solutions revenues, along with robust demand for COVID-19 and Influenza products. Expansion of adjusted operating margin bodes well for the stock.
Downsides
Third-Party Reimbursement Policies: The end users of QuidelOrtho’s point-of-care products are primarily physicians and other healthcare providers. In the United States, healthcare providers like hospitals and physicians who purchase diagnostic products generally rely on third-party payers (mainly private health insurance plans, federal Medicare and state Medicaid) to reimburse all or part of the cost of procedure. Usage of QuidelOrtho’s products would be adversely impacted if physicians and other healthcare providers do not receive adequate reimbursement for the cost of the same by their patients’ third-party payers.
Overdependence on Diagnostic Tests: A significant percentage of QuidelOrtho’s revenues comes from the sale of COVID-19 and influenza tests, and is expected to remain a significant portion of the company’s total revenues for at least the near future. As a result, if sales or revenues of COVID-19 or influenza tests fall for any reason, the company’s operating results would be adversely affected.
Estimate Trend
QuidelOrtho is witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 6.5% north to $16.78.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $384.1 million, suggesting a 117.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 5.1% against the industry’s 64.2% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.9%. PDCO’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 2.7%.
Patterson Companies has lost 5.7% compared with the industry’s 2.7% fall over the past year.
Masimo, carrying a Zacks Rank #2 at present, has an earnings yield of 3.3% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average beat being 4.4%.
Masimo has lost 33.2% compared with the industry’s 13.5% fall over the past year.