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3 Reasons to Hold QuidelOrtho (QDEL) Stock in Your Portfolio
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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 second-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 25.1% compared with 45.2% fall of the industry and the S&P 500's 4.1% decline.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $5.73 billion. QuidelOrtho’s earnings yield of 14.2% 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 surprise being 137.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about QuidelOrtho’s products, which it sells directly to end users and distributors, in each case, for professional as well as individual, non-professional and over-the-counter (OTC) use. The company has also begun to reach significant new markets as it introduced its QuickVue At-Home OTC COVID-19 test for reopening schools and many other locations.
Product Launch: We are upbeat about numerous product launches by QuidelOrtho over the past few months. During the second-quarter 2022 earnings call in August, the company confirmed that it had launched seven new assets globally in its labs business unit. The most notable was the U.S. launch of hemoglobin A1c, which has been registering very strong demand and significant opportunities in QuidelOrtho’s sales funnel. The company expects to launch in the United States in the second half of 2022.
Strong Q2 Results: QuidelOrtho’s robust second-quarter 2022 results buoy optimism. The company recorded robust overall top-line performance. The company registered strong revenues from majority of its four business units, along with robust geographical performances. Solid revenues from QuidelOrtho’s three categories (Recurring, Instrument and QuickVue) were also promising. 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 to reimburse all or part of the cost of the procedure. Use of QuidelOrtho’s products would be adversely impacted if physicians and other healthcare providers do not receive adequate reimbursement for the cost of the company’s products from 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 negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 25.1% south to $12.12.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $655.2 million, suggesting a 28.5% 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 McKesson Corporation (MCK - Free Report) .
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
AMN Healthcare has gained 1.2% against the industry’s 28.8% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.9%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has gained 0.5% against the industry’s 6.3% fall over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 84.4% against the industry’s 6.3% fall over the past year.
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3 Reasons to Hold QuidelOrtho (QDEL) Stock in Your Portfolio
QuidelOrtho Corporation (QDEL - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A solid second-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 25.1% compared with 45.2% fall of the industry and the S&P 500's 4.1% decline.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $5.73 billion. QuidelOrtho’s earnings yield of 14.2% 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 surprise being 137.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about QuidelOrtho’s products, which it sells directly to end users and distributors, in each case, for professional as well as individual, non-professional and over-the-counter (OTC) use. The company has also begun to reach significant new markets as it introduced its QuickVue At-Home OTC COVID-19 test for reopening schools and many other locations.
Product Launch: We are upbeat about numerous product launches by QuidelOrtho over the past few months. During the second-quarter 2022 earnings call in August, the company confirmed that it had launched seven new assets globally in its labs business unit. The most notable was the U.S. launch of hemoglobin A1c, which has been registering very strong demand and significant opportunities in QuidelOrtho’s sales funnel. The company expects to launch in the United States in the second half of 2022.
Strong Q2 Results: QuidelOrtho’s robust second-quarter 2022 results buoy optimism. The company recorded robust overall top-line performance. The company registered strong revenues from majority of its four business units, along with robust geographical performances. Solid revenues from QuidelOrtho’s three categories (Recurring, Instrument and QuickVue) were also promising. 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 to reimburse all or part of the cost of the procedure. Use of QuidelOrtho’s products would be adversely impacted if physicians and other healthcare providers do not receive adequate reimbursement for the cost of the company’s products from 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 negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 25.1% south to $12.12.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $655.2 million, suggesting a 28.5% 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 McKesson Corporation (MCK - Free Report) .
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 1.2% against the industry’s 28.8% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.9%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has gained 0.5% against the industry’s 6.3% fall over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 84.4% against the industry’s 6.3% fall over the past year.