The diagnostics & research industry is booming due to the resurgence of COVID-19 cases and increasing chronic disease sufferers. However, not all industry participants are well-positioned to gain in the near term. For instance, we think iSpecimen (ISPC) looks overvalued at the current price level and could witness a downtrend. But we believe fundamentally sound stocks in this space, Quest Diagnostics (DGX), QIAGEN (QGEN), and Global Cord Blood (CO), could be better picks to cash in on the industry’s growth. Read on.Lexington, Mass.-based healthcare technology provider iSpecimen Inc.’s (ISPC) revenue grew 20.8% year-over-year to $2.72 million in its fiscal third quarter ended September 30, 2021. However, the company’s total operating expenses came in at $4.18 million, up 40.5% year-over-year. Its loss from operations was $1.46 million, compared to $723,079 in the year-ago period. Furthermore, ISPC’s 50.64% trailing-12-month gross profit margin is 7.7% lower than the 54.64% industry average. In addition, its trailing-12-month CAPEX/Sales ratio is 99.6% lower than the 3.93% industry average. Also, in terms of forward EV/S ratio, its 10.00x is 66.1% higher than the 6.02x industry average. In addition, its forward P/S is 46% higher than the 7.23x industry average. So, we think it is wise to avoid the stock now.
The diagnostic & research industry is expected to witness an uptrend. Dr. Anthony Fauci recently said that the United States has “the potential to go into a fifth wave” of coronavirus infections amid rising cases and stagnating vaccination rates. This should benefit the diagnostics & research market in the near term. According to a PR Newswire report, the Medical Diagnostics Market is projected to grow by $61.56 billion from 2021 - 2025.
Therefore, we think investors that are looking to benefit from the diagnostics & research industry’s growth could invest in quality stocks Quest Diagnostics Incorporated (NYSE:DGX), QIAGEN N.V. (QGEN), and Global Cord Blood Corporation (CO).