What happened

Shares of coronavirus testing company Fulgent Genetics (FLGT 3.01%) are down 16.2% to $91.98 apiece as of 10:30 a.m. EDT. During the second quarter of 2021, reported yesterday, the company's revenue grew by a stunning 790% year over year to $153.6 million. Simultaneously, its earnings increased 24-fold to $79.8 million. But the company is expecting a sharp decline in its sales ahead, as it guides for only 90% revenue growth for the entire year compared to 2020.

So what

Fulgent derives the overwhelming majority of its revenue from coronavirus testing. Due to the rampant spread of the delta variant, daily COVID-19 cases in the U.S. spiked to more than 235,000 on Aug. 9, almost on par with January levels. However, the success of vaccination campaigns ensured that COVID-19-related deaths only saw a tiny spike. Thus, one could make the argument that the large supply of vaccines and approved treatments reduce deaths to such an insignificant level that makes testing redundant.

A patient getting a nasal swab at the clinic.

Image source: Getty Images.

Now what

Fulgent stock is incredibly cheap right now at just 6.5 times earnings. Its enterprise value is also far lower (the lower, the better) than its market cap of $2.773 billion due to the company having no debt and more than $773 million in cash on hand. Its non-COVID-19 gene testing revenue also grew by 296% year over year to $25.7 million in the quarter, so there's something to fall back on even if COVID-19 testing is no longer in demand. Overall, consider the sell-off as an opportunity to buy the healthcare stock on the dip.