Shares of Co-Diagnostics (NASDAQ:CODX) were sinking 7.2% lower as of 3:34 p.m. EDT on Wednesday, on a day when the major stock market indexes delivered solid gains. There weren't any new developments to explain why Co-Diagnostics stock fell. The most likely culprit behind the decline is a continued sell-off resulting from Abbott Labs (NYSE:ABT) winning FDA emergency use authorization (EUA) last week for its inexpensive rapid COVID-19 antibody test.
Co-Diagnostics' shares are down around 25% since Abbott announced on Aug. 26 that the FDA had issued EUA for its BinaxNOW COVID-19 antibody test. The cost of Abbott's test is only $5 per sample. The test can return results within 15 minutes with no special equipment required.
How concerning is this development for Co-Diagnostics? The company provided an unscheduled operational update on Tuesday playing up the importance of RT-PCR (or reverse-transcriptase polymerase chain reaction) tests like its Logix Smart COVID-19 test, stating that these tests remain the "gold standard" for novel coronavirus testing. This press release might not have been intended as a response to investors' concerns about competition from Abbott, but it could have come across that way to some readers.
While Co-Diagnostics is correct that RT-PCR tests are the best option, Abbott will likely make major inroads with its BinaxNOW test. Low costs and rapid on-site results will probably make the test's accuracy good enough for many healthcare providers. Co-Diagnostics is one of several companies that could lose market share.
What could turn things around for the healthcare stock? Solid sales growth.
Co-Diagnostics hopes to boost its growth with an expansion to its testing. The company stated in its update on Tuesday that it is adding a respiratory virus panel to its COVID-19 testing "in light of the upcoming flu season and the ongoing coronavirus pandemic." This test could prove to be popular with customers, especially if the flu season in the fall and winter is an especially nasty one.