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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, courtesy of its strong product portfolio. The optimism led by a solid first-quarter 2024 performance and its continued spending on research and development (R&D) are expected to contribute further. However, headwinds due to data security threats and reimbursement policies persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 60% compared with a 2.2% decline of the industry. The S&P 500 has witnessed 23% growth in the said time frame.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $2.32 billion. QuidelOrtho’s earnings yield of 5.45% compares favorably with the industry’s earnings yield of 0.95%. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average surprise being 16.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about QuidelOrtho’s current product clientele. It sells its products directly to end users and distributors for professional use in physician offices and hospitals, among others, as well as for individual, non-professional, over-the-counter use. QuidelOrtho’s diagnostic testing solutions include the Sofia and Sofia 2 Analyzers, QuickVue, InflammaDry and AdenoPlus products.
In April 2024, QuidelOrtho announced the addition of the ARK Fentanyl II Assay to its U.S. Vitros XT 7600 and 5600 Integrated Systems as well as its Vitros 4600 Chemistry System menu of assays as a MicroTip Partnership Assay. The Fentanyl assay is expected to aid hospital and emergency room customers respond to the critical demand for enhanced opioid testing. This addition is likely to significantly boost QuidelOrtho’s Labs business unit across the United States.
QuidelOrtho also announced the FDA 510(k) clearance for its QuickVue COVID-19 test. With CLIA certificates of waiver, this approval permits the test to be used accurately and conveniently in home and medical healthcare settings.
In March 2024, the company announced the receipt of Health Canada’s approval for its Triage PLGF (placental growth factor) test for laboratory use in Canada. The test is intended to detect the presence of angiogenic imbalance, which may lead to maternal and fetal complications of pregnancy, including pre-eclampsia. The latest regulatory approval is likely to significantly boost QuidelOrtho’s Point of Care business.
Continued Spend on R&D: QuidelOrtho’s long-term growth and profitability will depend, in part, on its ability to retain and grow its current customers and attract new customers by developing and delivering new and improved products and services that meet customers’ needs and expectations. As a result, QuidelOrtho’s management expects to continue to maintain its emphasis on R&D investments for long-term growth, including its next-generation platforms and assays, as well as additional assays to be launched on its current platforms.
Strong Q1 Results: QuidelOrtho’s earnings and revenues beat the Zacks Consensus Estimate in the first quarter of 2024. Excluding COVID-19 revenue impact, the company witnessed growth in total revenues. Excluding the one-time third-party collaboration settlement in the year-ago period, the company registered revenue growth in its Labs segment. Growth in China and Other regions, excluding COVID-19 revenues, was encouraging. QuidelOrtho also recorded strong revenue growth in the EMEA region, which buoys optimism.
Downsides
Data Security Threats: QuidelOrtho utilizes complex information technology systems to transmit and store information, including proprietary information, to support its business and process. In the future, these systems may prove inadequate to its business needs and necessary upgrades may not operate as designed, resulting in high costs or disruptions in portions of the company’s business.
Third-Party Reimbursement Policies: The end-users of QuidelOrtho’s POC 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 the procedure. The use of QuidelOrtho’s products would be affected 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.
Estimate Trend
QuidelOrtho is witnessing a stable estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings has remained stable at $1.89 per share.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $617.3 million, indicating a 7.2% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space that have announced quarterly results are Boston Scientific (BSX - Free Report) , Hologic (HOLX - Free Report) and Universal Health Services (UHS - Free Report)
Boston Scientific reported first-quarter 2024 adjusted earnings per share of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 7.5%.
Hologic, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.94%.
Hologic’s shares have risen 0.3% year to date compared with the industry’s 4.7% growth.
Universal Health Services has an Earnings ESP of +2.91% and a Zacks Rank of 2, at present. UHS has an estimated earnings growth rate of 30.5% for 2024.
UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.12%.
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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, courtesy of its strong product portfolio. The optimism led by a solid first-quarter 2024 performance and its continued spending on research and development (R&D) are expected to contribute further. However, headwinds due to data security threats and reimbursement policies persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 60% compared with a 2.2% decline of the industry. The S&P 500 has witnessed 23% growth in the said time frame.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $2.32 billion. QuidelOrtho’s earnings yield of 5.45% compares favorably with the industry’s earnings yield of 0.95%. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average surprise being 16.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strong Product Portfolio: We are upbeat about QuidelOrtho’s current product clientele. It sells its products directly to end users and distributors for professional use in physician offices and hospitals, among others, as well as for individual, non-professional, over-the-counter use. QuidelOrtho’s diagnostic testing solutions include the Sofia and Sofia 2 Analyzers, QuickVue, InflammaDry and AdenoPlus products.
In April 2024, QuidelOrtho announced the addition of the ARK Fentanyl II Assay to its U.S. Vitros XT 7600 and 5600 Integrated Systems as well as its Vitros 4600 Chemistry System menu of assays as a MicroTip Partnership Assay. The Fentanyl assay is expected to aid hospital and emergency room customers respond to the critical demand for enhanced opioid testing. This addition is likely to significantly boost QuidelOrtho’s Labs business unit across the United States.
QuidelOrtho also announced the FDA 510(k) clearance for its QuickVue COVID-19 test. With CLIA certificates of waiver, this approval permits the test to be used accurately and conveniently in home and medical healthcare settings.
In March 2024, the company announced the receipt of Health Canada’s approval for its Triage PLGF (placental growth factor) test for laboratory use in Canada. The test is intended to detect the presence of angiogenic imbalance, which may lead to maternal and fetal complications of pregnancy, including pre-eclampsia. The latest regulatory approval is likely to significantly boost QuidelOrtho’s Point of Care business.
Continued Spend on R&D: QuidelOrtho’s long-term growth and profitability will depend, in part, on its ability to retain and grow its current customers and attract new customers by developing and delivering new and improved products and services that meet customers’ needs and expectations. As a result, QuidelOrtho’s management expects to continue to maintain its emphasis on R&D investments for long-term growth, including its next-generation platforms and assays, as well as additional assays to be launched on its current platforms.
Strong Q1 Results: QuidelOrtho’s earnings and revenues beat the Zacks Consensus Estimate in the first quarter of 2024. Excluding COVID-19 revenue impact, the company witnessed growth in total revenues. Excluding the one-time third-party collaboration settlement in the year-ago period, the company registered revenue growth in its Labs segment. Growth in China and Other regions, excluding COVID-19 revenues, was encouraging. QuidelOrtho also recorded strong revenue growth in the EMEA region, which buoys optimism.
Downsides
Data Security Threats: QuidelOrtho utilizes complex information technology systems to transmit and store information, including proprietary information, to support its business and process. In the future, these systems may prove inadequate to its business needs and necessary upgrades may not operate as designed, resulting in high costs or disruptions in portions of the company’s business.
Third-Party Reimbursement Policies: The end-users of QuidelOrtho’s POC 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 the procedure. The use of QuidelOrtho’s products would be affected 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.
Estimate Trend
QuidelOrtho is witnessing a stable estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its earnings has remained stable at $1.89 per share.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $617.3 million, indicating a 7.2% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space that have announced quarterly results are Boston Scientific (BSX - Free Report) , Hologic (HOLX - Free Report) and Universal Health Services (UHS - Free Report)
Boston Scientific reported first-quarter 2024 adjusted earnings per share of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 7.5%.
Hologic, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.94%.
Hologic’s shares have risen 0.3% year to date compared with the industry’s 4.7% growth.
Universal Health Services has an Earnings ESP of +2.91% and a Zacks Rank of 2, at present. UHS has an estimated earnings growth rate of 30.5% for 2024.
UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.12%.