Please ensure Javascript is enabled for purposes of website accessibility

Why Co-Diagnostics Stock Is Tanking Today

By Keith Speights – Aug 14, 2020 at 11:18AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors weren't happy with the molecular diagnostics company's Q2 results.

What happened

Shares of Co-Diagnostics (CODX 2.75%) were 22.8% lower as of 10:55 a.m. EDT on Friday. The big drop came after the molecular diagnostics company announced its second-quarter results following the market close on Thursday.

Co-Diagnostics reported revenue in Q2 of $24 million and net income of $12.6 million, or $0.46 per diluted share. While those results reflected significant improvement over the prior-year period, they fell far short of what analysts were expecting. The consensus analysts' estimate projected revenue of $26.5 million and earnings of $0.59 per share.

So what

Does it really matter that Co-Diagnostics badly missed analysts' estimates? Yes and no.

Hand holding magnifying glass with stock chart and coronavirus in the background

Image source: Getty Images.

Any quarterly results are only a snapshot of a company's performance. It's much more important for investors to focus on the long term. From this perspective, Co-Diagnostics' Q2 revenue and earnings disappointments aren't anything to get worked up about.

On the other hand, Co-Diagnostics has been a high-flying growth stock this year thanks to demand for its COVID-19 diagnostics tests. Prior to the plunge on Friday, the stock had skyrocketed more than 2,000% year to date. This kind of sizzling performance requires meeting and exceeding ever-rising expectations, which Co-Diagnostics failed to do in the second quarter.

Now what

There's a reasonably good chance that the stock could rebound from its pullback. Demand for the company's COVID-19 tests isn't likely to decline. Co-Diagnostics hopes to deploy new flu and COVID-19 test panels during the third quarter.

Its partner, Clinical Reference Laboratory, also received Food and Drug Administration Emergency Use Authorization for a saliva-based COVID-19 test that can be taken at home. This test uses Co-Diagnostics' Logix Smart and CoPrimer technology. This saliva-based test could boost sales in the second half of 2020.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Co-Diagnostics, Inc. Stock Quote
Co-Diagnostics, Inc.
$2.99 (2.75%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.