What happened
Shares of Co-Diagnostics (CODX) are soaring 15.3% at 11:28 a.m. ET today, after the molecular diagnostics company announced it would buy back $30 million worth of its shares.
While the company says it's under no obligation to actually start or even complete the share repurchase program, investors took to heart that it would begin buying back its severely depressed stock. Shares are down 44% in 2022 and have fallen more than 63% over the past year.
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So what
Co-Diagnostics CFO Brian Brown said in a statement that the authorization showed the company's belief in its business. "This share repurchase program is aligned with our commitment to return value to our shareholders and reflects confidence in our balance sheet and strong cash flow generation," he said.
It's also a significant purchase of the healthcare company's stock. At yesterday's $5-per-share closing price, the authorization would equate to around 6 million shares or about 20% of the company's shares outstanding.
Now what
Co-Diagnostics is scheduled to report earnings next week, and the buyback announcement ahead of the report could be a way to salve investor wounds over a potentially disappointing performance this quarter as the COVID-19 pandemic moves to the background for many amid global geopolitical tensions.
The diagnostics and research outfit ended the previous quarter with around $84 million in cash and short-term investments, meaning the buyback program could take a sizable chunk of available cash away from other investments.
