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Why Co-Diagnostics Stock Is Tanking Today

By Keith Speights - Mar 26, 2021 at 10:40AM

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Investors didn't like what they heard in the company's fourth-quarter update.

What happened

Shares of Co-Diagnostics (CODX 10.66%) were tanking on Friday with the stock down 14.6% as of 10:07 a.m. EDT. The big drop came after the molecular diagnostics company provided its fourth-quarter update after the market close on Thursday.

So what

Co-Diagnostics easily beat the consensus analyst revenue estimate in Q4 with sales jumping 24% year over year to $27.1 million. However, the company missed bottom-line expectations with earnings of $0.43 per share coming in well below the consensus estimate of $0.48.

Gloved hands holding a cotton swab and a vial labeled "coronavirus"

Image source: Getty Images.

Probably the biggest reason why the healthcare stock is sinking today is Co-Diagnostics' outlook for the future. The company didn't provide guidance for 2021. However, CEO Dwight Egan stated, "COVID-19 test sales may not be as robust as in 2020."

Investors sometimes shrug off an earnings miss in one quarter. However, they never take it lightly when a company's growth prospects appear to be tapering off.

Now what

Perhaps the most important factor for Co-Diagnostics over the near term is the emergence of new coronavirus variants. If these variants become more widespread, it could drive higher demand for the company's COVID-19 tests. Such a scenario just might make Egan's warning about less robust sales in 2021 less concerning than it appears to be now.

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