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Why GenMark Diagnostics Stock Is Soaring Today

By Keith Speights – Updated Apr 23, 2020 at 11:17AM

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Investors appear to have high hopes for the company's COVID-19 diagnostic test sales as states move toward reopening their economies.

What happened

Shares of GenMark Diagnostics (GNMK) were soaring 17.3% as of 11:56 a.m. EDT on Thursday. GenMark didn't report any new developments, so why did its stock jump? The most likely reason is that investors anticipate significantly higher sales for the company's COVID-19 diagnostic tests, especially as some states move toward allowing businesses to reopen. 

So what

There are two sides of the coin with states relaxing shelter-at-home orders. Some states plan to take action only when they have more COVID-19 tests available. Others are moving forward more quickly, but it's possible that this course of action could increase the number of coronavirus cases, therefore boosting demand for COVID-19 diagnostic tests.

Gloved hand holding vial with coronavirus and a check next to positive box on the label

Image source: Getty Images.

Both scenarios favor GenMark. The company is already doing well during the coronavirus crisis. It provided a preview of its first-quarter results earlier this month, showing that it expects to report an 80% year-over-year revenue increase driven primarily by demand for its COVID-19 tests.

Now what

GenMark plans to announce its actual first-quarter results on May 4. Since the company has already tipped its hand on what numbers to expect, the bigger story will be any insight that its management might provide about how sales are growing in the early part of the second quarter. 

After today's jump, GenMark's market cap now stands at close to $640 million. Even with the prospects for strong sales growth over the next year, there's a good case to be made that those growth prospects are already largely baked into the stock price.

Keith Speights 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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