Here's Why You Should Add Quidel (QDEL) Stock To Your Portfolio

Quidel (NASDAQ:QDEL) Corporation QDEL has been gaining on the back of its strong diagnostics portfolio. A solid third-quarter 2021 performance, along with solid potential in In-Vitro Diagnostics (“IVD”) products, is expected to contribute further. However, headwinds due to stiff competition and overdependence on diagnostic tests persist.

Over the past year, this Zacks Rank #1 (Strong Buy) stock has lost 57.5% compared with 18% fall of the industry. The S&P 500 composite has risen 15.2% in the same time frame.

The renowned rapid diagnostic testing solutions provider has a market capitalization of $4.12 billion. Quidel’s earnings yield of 6.9% compares favorably with the industry’s negative yield. Quidel surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average earnings surprise being 119.5%.

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Let’s delve deeper.

Strong Diagnostics Portfolio: We are optimistic about Quidel’s focus on advancing its diagnostics business to improve human health, which has enabled the company to target market segments that represent significant total-market opportunities. To strengthen its position in the global diagnostics market, Quidel is currently offering rapid immunoassay tests for use in physicians’ offices and other urgent care or alternative site settings to include over the counter commencing in 2021.

Molecular diagnostic tests for use in hospitals and Specialized diagnostic solutions (including direct fluorescent assays and culture-based tests) for the clinical virology laboratory and other products serving the bone health, autoimmune and complement research communities are also being offered by Quidel.

Robust Potential in IVD Products: Quidel’s customers for IVD products are primarily centralized laboratories and decentralized POC or alternate settings. The decentralized point-of-care (“POC”) market utilizes a large variety of IVD products, ranging from moderate-sized instrumented diagnostic systems serving larger group practices to single-use disposable tests. Quidel believes that the uptick in POC testing is due to its clinical benefit, fast results, cost-effectiveness and patient satisfaction. The company also believes that growth in POC testing is in part due to evolving technological improvements creating high-quality tests with laboratory accuracy and POC ease-of-use.

Strong Q3 Results: Quidel’s robust third-quarter 2021 results buoy optimism. The company recorded strong Cardiometabolic Immunoassay and Specialized Diagnostic Solutions revenues, along with robust demand for Sofia SARS and QuickVue SARS antigen assays, and the Solana SARS-CoV-2 assay. Strong sales of MicroVue specialty products were also seen. Quidel’s receipt of the CE Mark for Savanna multiplex molecular analyzer and Savanna RVP4 assay raises optimism. Availability of the company’s QuickVue At-Home OTC COVID-19 Test also bodes well.

Downsides

Stiff Competition: The industry and market segment in which Quidel operates are highly competitive. There are various multinational and regional competitors making investments in competing technologies and products, including several large pharmaceutical and diversified healthcare companies. A number of those competitors have competitive advantages over Quidel, such as substantially greater resources.

Overdependence on Diagnostic Tests: A significant percentage of Quidel’s revenues comes from the sale of COVID-19 and influenza tests, and are 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

Quidel is witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 8.7% north to $6.90.

The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $430 million, suggesting a 46.9% fall from the year-ago quarter’s reported number.

Other Key Picks

A few other stocks from the broader medical space that investors can consider are AMN Healthcare Services (NYSE:AMN), Inc. AMN, Cerner Corporation (NASDAQ:CERN) CERN and Henry Schein (NASDAQ:HSIC), Inc. HSIC.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.5%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has gained 36.9% against the industry’s 61.1% fall over the past year.

Cerner, carrying a Zacks Rank #2, has an estimated long-term growth rate of 12.8%. CERN’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 3.2%.

Cerner has gained 16.5% against the industry’s 55.8% fall over the past year.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.9%. It currently carries a Zacks Rank #2.

Henry Schein has gained 7.6% compared with the industry’s 3.5% rise over the past year.

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