What happened

Co-Diagnostics (CODX -3.77%) stock jumped 24% in July, according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 5.6% last month.

Shares of the healthcare diagnostics company have risen 7.2% this month, through Friday, Aug. 7. In 2020, the stock has gained a whopping 2,770%, while the broader market has returned 4.9% over this period. 

A gloved hand holding a vial of blood labeled "coronavirus" with "no" checked (instead of "yes").

Image source: Getty Images.

So what

We can attribute Co-Diagnostics stock's robust July performance largely to a continuation of the momentum it's experienced since April, when the company announced that its Logix Smart COVID-19 testing technology had been validated by OralDNA Labs for use on saliva samples. This action cleared the path for sales of the test in the United States under the Food and Drug Administration's (FDA) Emergency Use Authorization program. 

As to August, Co-Diagnostics stock started the month off on a powerful note by skyrocketing 28% on Monday, Aug. 3 after the FDA approved the company's collaboration partner Clinical Reference Laboratory's saliva test for COVID-19. The stock, however, has since pulled back.

Here's Co-Diagnostics stock chart for 2020 so far:

CODX Chart

Data by YCharts.

Now what

I'll reiterate what I wrote in early June as Wall Street's estimates and my opinion remain the same:

Co-Diagnostics isn't profitable yet. However, Wall Street expects the company to be profitable, at least on an adjusted basis, for the full year. That's due, of course, to its tremendous revenue growth stemming from the COVID-19 pandemic.

In 2020, analysts are modeling for adjusted earnings per share of $2.06 on revenue of $93.5 million. Last year, the company posted a loss of $0.36 per share on sales of $215,000. 

Investors need to be careful when investing in the COVID-19 testing space because it's highly competitive and eventually, at least, demand for tests should subside considerably.