Fulgent Genetics (FLGT -11.93%) recently announced impressive first-quarter results. However, its stock remains well below the highs set earlier this year. In this Motley Fool Live video recorded on May 5, Motley Fool contributors Keith Speights and Brian Orelli answer a viewer's question about what investors are thinking these days about Fulgent.
Keith Speights: Will asks, "Can you guys please shed some wisdom on Fulgent Genetics?" FLGT is the ticker there. Will says, "The amount of cash they have is mind-blowing and the amount if sell-off is also mind-blowing. Their CEO is probably top one percent of CEOs in my opinion and I know they have a lot of COVID income. What in the world are investors thinking?"
So Brian, what in the world are investors thinking about Fulgent?
Brian Orelli: Investors are thinking that the COVID-19 testing is going way down, because there was so much of the growth story in the last year, that growth story will go away.
So we had talked previously about Exact Sciences, looking at $32.3 million in sales in the first quarter and only expecting $50 to $60 million for all of 2021. So that means they've done as much in the first quarter that they're going to expect in the next three quarters or less.
So I think that the issue is just that it's really hard to value a company when you don't understand their growth prospects in multiple years out. I don't think anybody really knows what the number of COVID-19 tests that are going to be required in 2022, 2023, or even in the fourth quarter of 2021.
So I think that the only way to do it is just based on the current situation and so that's what people have been doing and that's been causing the roller coaster ride that's caused Fulgent to go super high. Then now has crashed back down and where it will end up will probably be dependent more on the company's other genetic tests than they were with the COVID-19 tests.