Co-Diagnostics (NASDAQ:CODX) stock started 2020 as a penny stock, selling for below $1 per share. It had $215 million in revenue during 2019.
It opens for trade May 14 at nearly $27 per share.
That’s all thanks to the novel coronavirus.
Co-Diagnostics, based in Salt Lake City, calls itself the “low-cost leader of molecular diagnostics services.” When Covid-19 hit, the company was able to design a test for it in one week using a technology it calls CoPrimer.
Covid-19 Made Co-Diagnostics Stock a Star
InvestorPlace Markets Analyst Luke Lango highlighted Co-Diagnostics stock as a potential winner in March. At the time, he saw a one-time demand surge, and little likelihood of big demand past summer. Ian Bezek was also skeptical in April, calling Co-Diagnostics a “bad bet.”
InvestorPlace’s Josh Enomoto disagreed. On March 26 he called the stock a long-term play in disguise. “To prevent the next virus from crippling global economies, we need companies like Co-Diagnostics,” he wrote.
But even Enomoto underestimated what Co-Diagnostics’ testing kit would do to the stock. When he wrote in March, he thought the stock might be getting frothy at under $10 per share.
Co-Diagnostics is due to report its March quarter numbers after trading closes May 14. Analysts are expecting a loss of 4 cents per share. But earnings are now expected to be as much as 40 cents per share during the fourth quarter.
The stock, meanwhile, has been accelerating. It was already ahead of analyst price targets of $19 per share by May 13, when it gained another 12% overnight.
That’s not just because of CoPrimer’s accuracy. The test can also be done without using swabs, which are in short supply. With a vaccine still 12-18 months away, testing is now seen as part of a “new normal,” the route by which economies worldwide re-open.
How High, How Far?
On May 11, InvestorPlace analyst Louis Navellier called Co-Diagnostics stock a smart way to play Covid-19 testing.
The question remains how valuable the test might be, and what might come next.
Answers should start coming in after the close of trade May 14. Analysts are expecting revenue of $620,000, nearly three times what Co-Diagnostics brought in during all of 2019. This is only expected to accelerate, to $14.7 million for all of 2020 and $18.4 million in 2021.
If Co-Diagnostics can hit those marks, the shares are a bargain. The market capitalization for the company is still $650 million. The question remains just how profitable this will be. The current high estimate for 2020 earnings is 77 cents per share, an implied price-earnings ratio of 36.
The Bottom Line on Co-Diagnostics
There remain many unknowns about Co-Diagnostics.
How hard can it push pricing on its Covid-19 tests? How long might the pandemic make testing a requirement for economic activity? What happens after the pandemic?
Covid-19 is not the first coronavirus to hit humans. It’s just the most virulent. Ever since the severe acute respiratory syndrome (SARS) virus hit in 2003, public health experts have been expecting the current pandemic.
These viruses will continue to exist. The name “coronavirus” refers to their structure, with spikes that resemble a crown or corona. Coronaviruses are structurally different from flu viruses, as different from flu as people are different from whales. The increased trafficking of people and goods across continents guarantees the rapid spread of any new virus. There will be many new viruses.
Once the value of its Covid-19 test is discovered, Co-Diagnostics stock will offer immense value in a takeover by a larger pharmaceutical or testing company. As hard as it may be to believe, for a stock that has shot up so high so fast, you can buy it here.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.