Please ensure Javascript is enabled for purposes of website accessibility

Why Co-Diagnostics Shares Sank Today While the Stock Market Jumped

By Keith Speights – Sep 2, 2020 at 4:02PM

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

The most likely culprit: continued concerns about a competitor's new product.

What happened

Shares of Co-Diagnostics (CODX -3.21%) 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 (ABT 0.89%) winning FDA emergency use authorization (EUA) last week for its inexpensive rapid COVID-19 antibody test.

So what

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.

Gloved hand holding a vial with a label indicating a positive coronavirus reading

Image source: Getty Images.

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.

Now what

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.

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.
CODX
$3.32 (-3.21%) $0.11
Abbott Laboratories Stock Quote
Abbott Laboratories
ABT
$106.96 (0.89%) $0.94

*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
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

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.