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Why Quidel Shot 4% Higher Today

By Eric Volkman - Updated Jun 30, 2021 at 1:20PM

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There might be a surge in demand for coronavirus testing kits in the very near future.

What happened

Quidel (QDEL) well outpaced the broader stock market on Tuesday, rising to close nearly 4% higher on a day when the S&P 500 index barely crept upwards.

The company appeared to benefit from a stark reminder from one of America's largest metropolitan areas that the coronavirus remains a serious threat.

Pregnant woman receiving a vaccine jab.

Image source: Getty Images.

So what

On Tuesday, the Los Angeles County Department of Public Health recommended that everyone wear masks indoors, whether or not they've been fully vaccinated. The new guidance comes very shortly after the state of California lifted most of its mask mandates for those who've received a full cycle of vaccine.

The big concern here is the coronavirus' rapidly spreading delta variant, which is more transmissable than the original strain that spread across the world last year.

The agency's recommendation mirrors the latest guidance from the World Health Organization. Its officials said last week that even 100% vaccinated people should continue to wear masks and engage in social distancing practices.

Now what

These recommendations illustrate the fact that we might not be close to the finish line with the coronavirus, particularly with the delta variant on the loose. This plays well into the operations of Quidel, which is a top name in healthcare diagnostics generally and COVID-19 diagnostics specifically.

Considering that almost 75% of Quidel's sales derived from COVID-19 testing kits in its most recently reported quarter, it stands to benefit significantly from a likely ramp-up in testing in the face of the frightening new variant.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Quidel. The Motley Fool has a disclosure policy.

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