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Why OraSure Stock Lost 16% in February

By Demitri Kalogeropoulos – Updated Apr 11, 2019 at 4:32PM

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Lower demand from a key customer has reduced the company's sales outlook.

What happened

Medical product specialist OraSure (OSUR -3.31%) trailed the market last month by shedding 16% compared to a 3% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline contributed to significant losses for shareholders recently, with the stock down nearly 40% in the past year.

Medical specialists performing DNA testing

Image source: Getty Images.

So what

Investors reacted harshly to OraSure's fourth-quarter results, which in early February showed that sales fell 11% overall thanks to a drop off in its key genomics division. On a conference call with investors, management explained that this decline was due to the scaling back of purchases from a single large customer in the consumer DNA testing industry.

Check out the latest earnings call transcript for OraSure.

Now what

That customer has reduced its purchasing plans going forward as a result of its new promotions strategy. That move led OraSure to project weak sales for the fiscal first quarter. Management does believe operating trends will bounce back through the next three quarters of 2019, but investors still appear to be taking a cautious approach with the stock until they can see evidence that revenue gains and profitability won't be permanently pressured by OraSure's shifting selling environment.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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