After rising sharply on Monday, shares of medical technology company Lucira Health (LHDX 13.92%) are going in the opposite direction on Tuesday. The company's stock dropped by as much as 22.6% today and was down by 18.5% as of 1:51 p.m. EDT. Lucira Health did not report any news today, but we can attribute its woes on the stock market to bearish commentary from a Wall Street analyst.
Bank of America analyst Derik de Bruin downgraded Lucira Health's stock to underperform from buy. The analyst also gave the stock a price target of $9. Shares of the company closed yesterday's trading session at $10.91. To understand the reasons behind de Bruin's lack of enthusiasm regarding Lucira Health's prospects, a little bit of context is needed. Yesterday, the company reported that the U.S. Food and Drug Administration (FDA) had granted an Emergency Use Authorization (EUA) to its Lucira Check It COVID-19 test kit for over-the-counter (OTC) sale.
This bit of news seemed like a positive development for Lucira Health as the OTC availability of its coronavirus test kit will almost certainly increase its accessibility to the general public and could positively impact its sales. However, the healthcare company also provided less than impressive preliminary first-quarter results. Lucira Health expects revenue between $4 million and $4.5 million, which is well below the current consensus analyst estimate of $9.42 million.
Bank of America's forecast was for the company to report $12.5 million in revenue during the first quarter, and de Bruin believes that this (likely) top-line miss will be due to a lack of demand for the company's COVID-19 test kit. Also, the COVID-19 testing market as a whole is taking a hit due to the rollout of vaccines for the disease, which further complicates matters for Lucira Health.
Lucira Health is set to report its first-quarter earnings on May 13. The company's financial results will tell investors more regarding the impact the recent EUA will have on its overall performance.