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Why Co-Diagnostics Stock Is Absolutely on Fire Today

By George Budwell - Updated Feb 27, 2020 at 9:36AM

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Shares of the medical diagnostics company keep churning higher.

What happened

Shares of the medical diagnositics company Co-Diagnostics (CODX -30.65%) gained another 152% in pre-market trading Thursday. The company's shares have now risen by a jaw-dropping 1,240% since the start of the year.

What's driving this sustained breakout in the company's stock? On Feb. 24, Co-Diagnostics announced that it had received regulatory clearance for its Logix Smart Coronavirus COVID-19 test. As a result, this first-of-its-kind diagnostic will reportedly become immediately available for export from the United States as a CE-marked in-vitro diagnostic. In plain terms, this newly approved test can be used for a rapid diagnosis of patients suspected of having the SARS-CoV-2 (COVID-19) virus in countries that accept CE marking (meaning it meets Europe's standards) as a valid regulatory approval. 

A young man wearing shades throwing U.S. currency into the air.

Image source: Getty Images.

So what

Diagnosing the COVID-19 illness has proved to be a tough nut to crack for a variety of reasons. So there is a well-defined medical need for an easy-to-use molecular diagnostic. Co-Diagnostics hopes that the Logix Smart Coronavirus COVID-19 test can fill in this gap. If so, this product could turn out to be a huge boon for the company from a financial standpoint. There are already well over 80,000 documented cases of patients with COVID-19. What's more, several countries like Italy, Iran, and South Korea have experienced a notable spike in the number of cases in recent days. 

Now what

Co-Diagnostics' market cap still remains under $300 million, even after this latest jump. So while it's hard to estimate how big a commercial opportunity this test represents, it surely dwarfs the company's present market cap. Put bluntly, this small-cap biotech stock could have a lot more room to run, despite its already monstrous spike since the start of the year. 

George Budwell 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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