Co-Diagnostics Inc (NASDAQ:CODX) shares jumped Friday after Litchfield Hills Research doubled its price target for the company to $36 in an analyst note after the company's first-quarter revenue blew past consensus estimates due to demand for its coronavirus (COVID-19) testing kits.
The company posted revenue of $1.55 million, more than double the consensus projection of $600,000, thanks to sales of testing kits and other equipment. Currently, the company’s test is being sold in 50 countries and 20 US states.
Co-Diagnostics stock recently climbed nearly 3% to $18.56 in New York.
READ: Maxim upgrades Co-Diagnostics rating to 'Buy' as demand grows for its coronavirus diagnostic test
Litchifeld boosted its 2020 full-year estimate from a loss of $0.28 per share on revenue of $4.1 million to a gain of $1.42 per share on $83 million in revenue and it’s 2021 estimate from a loss of $0.03 per share on revenue of $28 million to a gain of $1.20 per share on revenue of $89 million.
The reason for the optimism is that Litchfield believes the addressable market for coronavirus tests in the US is worth $52 billion. The first estimates that roughly 100 million people will need to be tested weekly to prevent future breakouts. At a price of $10 per test, that reaches 5.2 billion tests and $52 billion after a year.
“If it looks to investors like a free-for-all in the market for COVID-19 tests, it is because it is,” Litchfield wrote. “The CDC and the federal government have left it to the states, educational institutions, business enterprises, sports franchises and the rest of us in the U.S. to find their own test supplies and equipment.”
In order to achieve the necessary testing rate, the firm identified four qualities a coronavirus would need: A high throughput, 100% specificity and sensitivity, a low cost and no reliance on special equipment not found in a typical lab.
The Co-Diagnostics test is better positioned to make that happen that its competitors, the firm said.
“We can offer two illustrative comparisons,” Litchfield wrote. “The first is the Abbot Labs (ABT-NR) ID NOW platform which has been made famous for use in the White House. It has been touted in the White House as a 5-minute test, but that isn’t true unless your result is positive. A negative test result, which is what you want, takes 13 minutes.
“The [Abbot] machine is not a common lab device, it would have to be purchased in order to use it, the point-of-use containers are not a standard test tube, which would also add to the cost and its throughput is low making it suitable for small businesses only.”
Other higher throughput alternatives still have issues with cost, the firm said,
“Another well known option is the GenMark (GNMK-NR) ePlex platform,” Litchfield wrote. “This is a higher throughput option than the Abbot ID NOW (in the Tower configuration it can test up to 288 patient samples/day) but it isn’t already in every lab and it uses its own cartridges instead of common test tubes which would add to the cost.”
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