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Why Co-Diagnostics Stock Rose 15.8% on Monday

By Jim Halley – Dec 27, 2021 at 4:21PM

Key Points

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The molecular testing company is expected to benefit from the rise in cases of the omicron COVID-19 variant.

What happened

Co-Diagnostics (CODX -0.71%) saw its shares rise 15.8% on Monday. The molecular diagnostics company, which closed at $9.41 on Thursday, opened at $9.50 on Monday and rose to $10.90 shortly after noon. The company is up more than 9.9% for the year. The stock is still closer to its 52-week low of $7.01 than its 52-week high of $20.68.

A masked person in a car awaits a COVID-19 test from a masked, gloved, and shielded medical professional at a drive-up testing site.

Image source: Getty Images.

So what

The company didn't have any breaking news, but the continued rise in the omicron COVID-19 variant buoyed the company's stock. The company also announced last week that is is near to releasing its at-home COVID-19 test.

It's been a big year for Co-Diagnostics, thanks to its group of COVID-19 polymerase chain reaction (PCR) diagnostic assays. Last month, the company said its revenue through nine months was $77.5 million, up 63.4% year over year, adding that it expected full-year revenue of $96 million to $100 million, compared with $74.55 million last year. The company's reported net income through nine months of $29.2 million represents a drop of 1.7% over the same period last year, but the company is still on track for a second consecutive year in the black and its second profitable year since its initial public offering in 2017. Most of its $30.1 million revenue (89%) in the quarter was due to sales of its Logix Smart COVID-19 test, Co-Diagnostics said.

One reason for the lowered net income is the company just purchased Idaho Molecular and Advanced Conceptions with 4.72 million shares of stock to help it ramp up its at-home Eikon testing platform and YourTest PCR device for its market release, possibly in the first quarter of 2022. The company said it expects the deal to close by the end of this year, and both companies will be subsidiaries of Co-Diagnostics.

Though the Food and Drug Administration has yet to approve the test, the point will be for the Eikon platform to use nasal swab and saliva samples to test for COVID-19 and other diseases. Co-Diagnostics CEO Dwight Egan said, in the third-quarter report, that the company is shooting for affordable PCR tests at point-of-care and at-home settings to help slow the spread of COVID.

Now what

Co-Diagnostics' rise has been due almost entirely to the need for increased testing for COVID-19. While recent events show that the disease may not go away anytime soon, the biotech company will still need to extend its revenue streams to be a good long-term stock. It has shown it is looking to do that with multi-use tests. While the stock certainly has risks, it doesn't appear to be overpriced, with a forward price-to-earnings ratio of 9.633.

Jim Halley owns Co-Diagnostics. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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