Co-Diagnosis: Buy the Dip? | The motley fool
Co-Diagnosis (NASDAQ: CODX) was one of the best-performing stocks of 2020, but a fourth-quarter earnings report failed to impress investment banks following the molecular diagnostics company. The stock has been under pressure since Maxim downgraded the stock to hold, and HC Wainwright nearly halved his price target on Co-Diagnostics.
Is Co-Diagnostics a good stock to buy on a downturn, or should you be cautious?
The most important thing to remember about this business is that it currently relies on COVID-19 testing for almost any income. Unfortunately, cash flow from coronavirus testing has likely peaked.
Although having access to public markets since its initial public offering (Initial Public Offering) in 2017, last year was the first time that Co-Diagnostics was able to report an annual profit. After earning around $ 42 million in 2020, expectations for 2021 are significantly lower and no other diagnostic test is ready to take over.
Despite giving up around 40% of its value in the past week, Co-Diagnostics is still claiming $ 250 million market capitalization at recent prices. That’s a huge payoff for a business without a significant source of revenue to lean on once demand for COVID-19 testing falls off a cliff.
Co-Diagnostics’ proprietary technology platform is positioned to play an important role in the molecular diagnostics market, but it is a hyper-competitive industry. It’s probably best to wait and see if this business can achieve post-pandemic profitability before adding this risky stock to your portfolio.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.