What happened
Coronavirus-test manufacturers Becton, Dickinson (BDX +0.41%), Co-Diagnostics (CODX +3.15%), and Fluidigm (FLDM 1.07%) saw their shares move by double-digit percentages in August, according to data provided by S&P Global Market Intelligence.
Although the companies were affected by the same trends, their performances for the month were incredibly different. Shares of Becton, Dickinson (usually referred to as B-D) fell 13.7%. Co-Diagnostics' stock, though, plunged a jaw-dropping 54.6% for the month. Meanwhile, Fluidigm's shares actually rose in August, by a healthy 11.5% -- but at one point were up by more than 50% before falling sharply.
Image source: Getty Images.
So what
B-D's stock first ran into problems on Aug. 6, when the medical-device maker reported Q3 2020 earnings that disappointed the market. B-D's bread and butter is selling general medical supplies, from simple disposable items like syringes and tubes all the way up to complex diagnostic machines like the handheld Veritor testing system.
The company's Q3 earnings exceeded estimates, due largely to coronavirus-related demand for the company's COVID-19 rapid-response Veritor test, as well as sales of syringes and needles for potential vaccination campaigns. However, revenue lagged expectations, since many elective surgeries that require B-D's supplies were canceled during Q3. The company issued disappointing guidance for fiscal 2020, calling for a 14% to 16% decline in year-over-year earnings. Not only did B-D's stock drop about 8% on the news, but several other device makers' shares, including Fluidigm and Co-Diagnostics, fell between 5% and 9%.
A few days later, on Aug. 13, Co-Diagnostics posted an earnings miss of its own, causing its stock to tumble.
Then, on Aug. 25, Fluidigm announced news that sent its shares soaring (and should have easily caused it to outperform for the month): Its saliva-based coronavirus test was granted emergency use authorization (EUA) by the U.S. Food and Drug Administration (FDA). Because it uses a saliva collection as opposed to a nasal swab, Fluidigm's test -- which is run on the Fluidigm Biomark platform -- boasts high throughput of up to 6,000 test samples per day, per machine.
But the very next day, it all came crashing down, as heavyweight Abbott Laboratories (ABT 1.00%) announced that its own coronavirus test had been granted EUA by the FDA. Unlike Co-Diagnostics' test, which takes about two hours to generate a result, Abbott's is rapid-response, meaning it can generate results in about 15 minutes. Unlike B-D's and Fluidigm's tests, it is self-contained, so it doesn't require a Veritor, Biomark, or any other testing system to be used. And it's cheap: about $5 per test. Shares of B-D, Fluidigm, Co-Diagnostics, and pretty much every other coronavirus-test maker sank on the news.
Now what
Co-Diagnostics points out (rightly) that its polymerase chain reaction (PCR) test is considered the gold standard for reliability in COVID-19 testing. There will still be demand for such tests to check against rapid-response test results for potential false positives. Fluidigm, for its part, points out that its saliva test is easier to administer than nasal swab tests, like Abbott's, and is more comfortable for the patient.
B-D hasn't tried to put a positive spin on the news, but it says it should be able to produce 2 million of its own 15-minute tests per week by the end of September, and it's unlikely that Abbott will be able to meet demand for rapid-response testing by itself, meaning B-D is sure to remain a part of the testing landscape.
All three companies have healthcare businesses beyond COVID-19 tests: B-D has its massive general medical supply business; Fluidigm is invested in mass cytometry, genomics, and immune profiling; and Co-Diagnostics has developed tests for genetic traits in crops and mosquito-borne illnesses. But it was the need for coronavirus tests driving the big gains the companies' stocks experienced earlier this year.
Investors interested in these companies should evaluate their long-term prospects beyond their coronavirus tests before jumping in.
