What happened
On Tuesday, Quidel (QDEL) was a bright spot in a generally downbeat and gloomy stock market. Shares of the healthcare-diagnostics specialist were up by more than 6% in late afternoon trading, following an extremely bullish new research note from an analyst.
So what
The raging bull is Raymond James prognosticator Andrew Cooper. Tuesday morning, Cooper upgraded his recommendation on the stock from buy to strong buy, while boosting his price target to $150 per share from the previous $130.
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Cooper's upgrade and price target boost are due largely to Quidel's looming acquisition of peer Ortho Clinical Diagnostics Holdings in a $6 billion deal that was agreed to last December.
The analyst wrote in his note that, "[W]e... simply find the combination too severely undervalued not to adjust our view even more positively."
Almost needless to say, he expects Quidel's acquisition will close. Once it does, the healthcare-diagnostics company will be in possession of an asset with a top line consisting of 93% recurring revenue that's growing at a nearly 4% compound annual growth rate (CAGR).
"Paths to upside are numerous and substantial," Cooper continued, citing "higher durable" COVID testing (the company's main engine of growth lately), among other products.
Now what
It's not hard to be optimistic about Quidel these days. Last Thursday, after market close, the company unveiled its Q4 results. Although both revenue and profitability were notably lower on a year-over-year basis, they both beat the average analyst estimate. This was particularly true on the bottom line, with non-GAAP (adjusted) earnings of $7.29 per share trouncing the collective prognosticator forecast of $4.89.
