What happened

Shares of Sorrento Therapeutics (NASDAQ:SRNE) rocketed 31% higher on Tuesday, following bullish comments from a respected analyst.

So what

H.C. Wainwright analyst Raghuram Selvaraju reiterated his buy rating on Sorrento's stock and boosted his target price from $24 to $30. His new target represents potential gains for investors of more than 133%, based on Tuesday's closing price of $12.84.

Selvaraju said he is intrigued by the potential of a new rapid diagnostic test that Sorrento recently licensed from Columbia University that can reportedly detect the SARS-CoV-2 virus in as little as 30 minutes using saliva samples rather than unpleasant nasal swabs. 

A digital bull is climbing an upwardly sloping stock chart.

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Selvaraju also appreciates that Columbia's test, called COVI-TRACE, requires no specialized laboratory equipment, which should make it easy to use in a variety of settings. "We believe that the incentive to facilitate the large-scale and indeed ubiquitous deployment of the COVI-TRACE test is extremely high, and governments worldwide may seek to implement this in their respective regions," Selvaraju said. 

Now what

Based on an estimated price of $15 per test and a peak forecast of approximately 56.5 million tests per year, Selvaraju believes the test could generate total sales of roughly $1 billion for Sorrento. 

Still, investors should note that Sorrento has not yet received an emergency use authorization from the Food and Drug Administration, and more analysis is needed before the effectiveness of the COVI-TRACE test is confirmed.