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Why Quidel Stock Suddenly Plunged This Afternoon

By Jon Quast - Mar 10, 2021 at 4:06PM

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Investors weren't expecting demand for coronavirus testing to drop this much this soon.

What happened

Shares of Quidel Corporation (QDEL 1.61%) suddenly plunged this afternoon, following comments made by CEO Doug Bryant at the Barclays Global Healthcare Conference today. The healthcare company's tests were in high demand amid the COVID-19 pandemic, however Bryant said demand has plunged between 30% and 40% in February and March, as compared with the fourth quarter of 2020. As of 3:50 p.m. EST, Quidel stock was down almost 17%.

So what

Bryant and the rest of the Quidel management team expect $450 million in revenue for the first quarter of 2021 as a worst case scenario. This projection assumes there's no new spikes in coronavirus cases going forward. The outlook also assumes that the current vaccines will remain effective against the newer mutations of the virus.

A frustrated investor lays his head down in defeat with a down red stock chart in the background.

Image source: Getty Images.

For perspective, Quidel generated revenue of almost $175 million in the first quarter last year, but over $809 million in the fourth quarter. So it's guiding for at least a 157% year-over-year growth or a 44% quarter-over-quarter decline. Based on how sharply the stock fell, it seems investors are focusing on the more pessimistic way to take this.

For the year, Quidel management expects revenue of $2.48 billion as a worst case scenario. Again for perspective, it generated revenue of $1.66 billion in 2020. So management is guiding for at least a 49% annual jump in revenue. However, investors had expected $2.9 billion.

QDEL Chart

QDEL data by YCharts

Now what

There could also be something else coming into play with today's sell-off. Wall Street largely argues that the companies that did well during the pandemic will revert to normal once it's over. Therefore, any sniff of slowing growth now is enough to cause shareholders to flood the exits with these kinds of stocks.

Bryant, however, was much more optimistic regarding Quidel's long-term future. To him, the success of coronavirus testing allowed the company to scale manufacturing capabilities -- scale that can now be leveraged for its other products going forward. So while the pandemic will end someday and demand for those tests will eventually falter, Bryant believes it positions Quidel for success in the long run. 

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