Coronavirus Test Kit Demand To Drive These 3 Stocks

The coronavirus pandemic has now impacted 192 countries and infected nearly 339,710 people globally. Many countries are in the containment stage. At this stage, simple measures like washing hands and sneezing etiquette could help prevent the infection from spreading.

But the major concern is rapid diagnostics and shortage of test kits. At present, samples from suspected carriers are sent to certified laboratories where technicians use a procedure called reverse transcriptase polymerase chain reaction (RT-PCR) to look for the genetic code of the coronavirus using a special reagent. However, the process takes nearly three hours.

Additionally, in the United States, due to the shortage of kits, New York and other states have been reserving kits for those with the highest risk or most severe symptoms. Diagnostic kit suppliers are working closely with the U.S. Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC) to automate test results and speed up the process.

COVID-19 Test Kit Demand Spikes

So far in the United States, more than 35,000 people have been infected and as community spread rises, health care officials are looking for faster and proper assessment solutions to isolate the infected.

Point-of-care testing means that results will be delivered right where patients are tested including hospitals, urgent care centers or emergency rooms, instead of samples being sent to a laboratory.

A few companies have come to limelight with their rapid diagnostic test kit in the last few days. On Mar 20, the FDA approved the first coronavirus test kit that can be conducted entirely at the point-of-care for a patient and deliver results in 45 minutes. This kit designed by Cepheid, subsidiary of Danaher Corporation (NYSE:DHR) , will be shipped to U.S. facilities by Mar 30.

However, the test kits will only be used at hospitals where patients are already in an emergency room. U.S. assistant health secretary Brett Giroir said that more than 10 million test kits were distributed to laboratories across the United States in the first two weeks of March. He believes the country will have 17 million more kits by the end of March.

Similarly, on Mar 17, Quidel Corporation (NASDAQ:QDEL) received emergency use authorization from the FDA for Lyra SARS-CoV-2 Assay, a testing kit for the detection of nucleic acid from swab specimens of patients suspected of COVID-19.

What’s more? Thanks to a recent change in FDA policy, companies can begin sales of coronavirus test kits while awaiting FDA clearance under Emergency Use Authorization (EUA).

3 Stocks to Buy

Point-of-care testing enables better patient triage, bed management, and patient care decisions. Hence, given the current developments, it is prudent to keep a close watch on these three stocks that deal in diagnostic kits and may return well on investment.

Aytu BioScience, Inc. (NASDAQ:AYTU) , a Zacks Rank #2 (Buy) company, recently designed and produced coronavirus test kits that provide results in 10 minutes or less. Though the kit awaits FDA approval, the company has orders for 100,000 tests by the end of March, and has to deliver the kits to the Denver International Airport. The kit uses a drop of blood from a finger prick, which seems to provide faster results than nasal swabs. However, the company recommends a second test for people tested positive. The company’s estimated earnings growth rate for the current quarter is 22% against the Zacks Medical - Biomedical and Genetics industry’s projected earnings decline of 89.3%.

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Next we have, QIAGEN N.V. (NYSE:QGEN) . The company provides RNA test reagents used to perform certain COVID-19 diagnostics. Qiagen plans to scale up to support more than 6.5 million tests by the end of April, and more than 10 million per month by the end of June. This Zacks Rank #2 company’s estimated earnings growth rate for the current quarter is 7.4%.

Last on our list is Co-Diagnostics, Inc. (NASDAQ:CODX) . The company has completed the clinical evaluation of its Logix Smart COVID-19 PCR test that detects COVID-19’s presence in under two hours. This Zacks Rank #2 company’s estimated earnings growth rate for the next quarter is 44.4%.

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