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Reasons to Retain QuidelOrtho Stock in Your Portfolio 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 second-quarter fiscal 2024 performance and its continued spending on research and development (R&D), is expected to contribute further. However, risks due to overdependence on diagnostic tests and reimbursement policies persist.
This Zacks Rank #3 (Hold) company has lost 41.6% year to date against 10.7% growth of the industry. The S&P 500 has witnessed 19.6% growth in the said time frame.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $2.94 billion. QuidelOrtho’s earnings yield of 4.1% compares favorably with the industry’s 1.3%. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 31.73%.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Factors Favoring QDEL’s Growth
Robust 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 August 2024, QDEL announced the FDA 510(k) clearance for its VITROS syphilis assay as part of its menu, which is likely to strengthen its position as a leader in infectious disease testing. 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 company also announced the FDA 510(k) clearance for its QuickVue COVID-19 test. With CLIA certificates of waiver, this approval grants permission for 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.
Continued Spend on R&D: QDEL’s long-term growth and profitability will mostly depend on its capacity to satisfy consumer requirements and expectations by creating and providing new, improved products and services that both increase and draw in new clients. Management of QuidelOrtho expects to keep a strong focus on R&D expenditures for long-term growth, which will include new assays for its current platforms, as well as next-generation platforms and assays.
However, for the second quarter of fiscal 2024, research and development expenses declined 9.8% year over year to $56.3 million.
Strong Q2 Results: QuidelOrtho’s earnings and revenues beat the Zacks Consensus Estimate in the second quarter of 2024. Excluding COVID-19 revenue impact, the company witnessed growth in total revenues. 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. The continued uptick in Sofia instruments and growth in QuidelOrtho’s integrated installed base and automation were encouraging.
Factors That May Offset the Gains for QDEL
Overdependence on Diagnostic Tests: A significant percentage of QuidelOrtho’s total revenues comes from a limited number of its product families. The company’s revenues can be highly concentrated over a small number of products, including certain respiratory products. For June 2024 and June 2023, revenues related to respiratory products accounted for approximately 9% and 13% of the company’s total revenues, respectively, primarily driven by sales of COVID-19 products.
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 30 days, the Zacks Consensus Estimate for its earnings has remained stable at $1.80 per share.
The Zacks Consensus Estimate for the company’s third-quarter 2024 revenues is pegged at $648.2 million, indicating a 12.9% decline from the year-ago quarter’s reported number.
Inspire Medical’s shares have surged 60.5% in the past year. Estimates for the company’s earnings have moved 5.1% north to $1.65 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 436.2%. In the last reported quarter, it posted an earnings surprise of 328.6%.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 125% to 27 cents in the past 30 days. Shares of the company have soared 135.2% in the past year compared with the industry’s 14.9% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Boston Scientific’s 2024 EPS have increased 1.7% to $2.40 in the past 30 days. In the past year, shares of BSX have risen 55.5% compared with the industry’s 17.9% growth.
In the last reported quarter, BSX delivered an earnings surprise of 6.90%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.
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Reasons to Retain QuidelOrtho Stock in Your Portfolio 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 second-quarter fiscal 2024 performance and its continued spending on research and development (R&D), is expected to contribute further. However, risks due to overdependence on diagnostic tests and reimbursement policies persist.
This Zacks Rank #3 (Hold) company has lost 41.6% year to date against 10.7% growth of the industry. The S&P 500 has witnessed 19.6% growth in the said time frame.
The renowned rapid diagnostic testing solutions provider has a market capitalization of $2.94 billion. QuidelOrtho’s earnings yield of 4.1% compares favorably with the industry’s 1.3%. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 31.73%.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Factors Favoring QDEL’s Growth
Robust 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 August 2024, QDEL announced the FDA 510(k) clearance for its VITROS syphilis assay as part of its menu, which is likely to strengthen its position as a leader in infectious disease testing. 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 company also announced the FDA 510(k) clearance for its QuickVue COVID-19 test. With CLIA certificates of waiver, this approval grants permission for 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.
Continued Spend on R&D: QDEL’s long-term growth and profitability will mostly depend on its capacity to satisfy consumer requirements and expectations by creating and providing new, improved products and services that both increase and draw in new clients. Management of QuidelOrtho expects to keep a strong focus on R&D expenditures for long-term growth, which will include new assays for its current platforms, as well as next-generation platforms and assays.
However, for the second quarter of fiscal 2024, research and development expenses declined 9.8% year over year to $56.3 million.
Strong Q2 Results: QuidelOrtho’s earnings and revenues beat the Zacks Consensus Estimate in the second quarter of 2024. Excluding COVID-19 revenue impact, the company witnessed growth in total revenues. 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. The continued uptick in Sofia instruments and growth in QuidelOrtho’s integrated installed base and automation were encouraging.
Factors That May Offset the Gains for QDEL
Overdependence on Diagnostic Tests: A significant percentage of QuidelOrtho’s total revenues comes from a limited number of its product families. The company’s revenues can be highly concentrated over a small number of products, including certain respiratory products. For June 2024 and June 2023, revenues related to respiratory products accounted for approximately 9% and 13% of the company’s total revenues, respectively, primarily driven by sales of COVID-19 products.
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 30 days, the Zacks Consensus Estimate for its earnings has remained stable at $1.80 per share.
The Zacks Consensus Estimate for the company’s third-quarter 2024 revenues is pegged at $648.2 million, indicating a 12.9% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Inspire Medical (INSP - Free Report) , TransMedics Group (TMDX - Free Report) and Boston Scientific (BSX - Free Report) . While Intuitive Surgical and TransMedics currently sport a Zacks Rank #1 (Strong Buy), Quest Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inspire Medical’s shares have surged 60.5% in the past year. Estimates for the company’s earnings have moved 5.1% north to $1.65 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 436.2%. In the last reported quarter, it posted an earnings surprise of 328.6%.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 125% to 27 cents in the past 30 days. Shares of the company have soared 135.2% in the past year compared with the industry’s 14.9% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Boston Scientific’s 2024 EPS have increased 1.7% to $2.40 in the past 30 days. In the past year, shares of BSX have risen 55.5% compared with the industry’s 17.9% growth.
In the last reported quarter, BSX delivered an earnings surprise of 6.90%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.