Reasons to Retain QuidelOrtho Stock in Your Portfolio for Now

QuidelOrtho Corporation QDEL is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by a solid third-quarter fiscal 2024 performance and its continued spending on research and development (R&D), is expected to contribute further. However, risks due to overdependence on diagnostic tests and reimbursement policies persist.This Zacks Rank #3 (Hold) company has lost 45.7% in the year-to-date period against 14.5% growth of the industry. The S&P 500 has witnessed 27.2% growth in the said time frame.The renowned rapid diagnostic testing solutions provider has a market capitalization of $2.75 billion. QuidelOrtho’s earnings yield of 4.4% compares favorably with the industry’s 1.8%. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 50.28%.Image Source: Zacks Investment ResearchFactors Favoring QDEL’s GrowthRobust Product Portfolio: We are upbeat about QuidelOrtho’s current product clientele. It sells its products directly to end users and distributors for professional use in physician offices and hospitals, among others, as well as for individual, non-professional, over-the-counter use. QuidelOrtho’s diagnostic testing solutions include the Sofia and Sofia 2 Analyzers, QuickVue, InflammaDry and AdenoPlus products.Per management, Savanna is continuing to provide significant competitive advantages in the Molecular Point-of-Care market. A successful U.S. launch of QDEL’s Savanna instrument is likely to offer incremental revenues and margin growth opportunities for the company. Building on the Savanna instrument and HSV panel approvals in the United States, the company expects to enter clinical trials on its respiratory panel later this year. The company aims to be in the market with both the Respiratory Panel and the STI panel in 2025.In August 2024, QDEL announced the FDA 510(k) clearance for its VITROS syphilis assay as part of its menu, which is likely to strengthen its position as a leader in infectious disease testing. The company also announced the FDA 510(k) clearance for its QuickVue COVID-19 test. With CLIA certificates of waiver, this approval grants permission for the test to be used accurately and conveniently in home and medical healthcare settings.In April 2024, QuidelOrtho announced the addition of the ARK Fentanyl II Assay to its U.S. Vitros XT 7600 and 5600 Integrated Systems, as well as its Vitros 4600 Chemistry System menu of assays as a MicroTip Partnership Assay. In March 2024, the company announced the receipt of Health Canada’s approval for its Triage PLGF (placental growth factor) test for laboratory use in Canada.Continued Spend on R&D: QDEL’s long-term growth and profitability will mostly depend on its capacity to satisfy consumer requirements and expectations by creating and providing new, improved products and services that increase and draw in new clients. QuidelOrtho management expects to keep a strong focus on R&D expenditures for long-term growth, which will include new assays for its current platforms, as well as next-generation platforms and assays.However, in the third quarter of fiscal 2024, research and development expenses declined 9.1% year over year to $55.9 million.Strong Q3 Results: QuidelOrtho’s earnings and revenues beat the Zacks Consensus Estimate in the third quarter of 2024. The company witnessed growth in its recurring revenues. Strong revenue growth in the EMEA and Japan, Asia-Pacific and Latin America regions buoys optimism.Per the third-quarter earnings call, the respiratory business performed well during the quarter, with a strong performance on the Sofia flu and COVID-19 combo tests.Factors That May Offset the Gains for QDELOverdependence on Diagnostic Tests:  A significant percentage of QuidelOrtho’s total revenues comes from a limited number of its product families. The company’s revenues can be highly concentrated over a few products, including certain respiratory products.For September 2024 and September 2023, revenues related to respiratory products accounted for approximately 23% and 25% of the company’s total revenues, respectively, primarily driven by sales of COVID-19 products. The year-over-year decline was related to the lower respiratory season in 2023 compared with the prior year, particularly in COVID-19-related testing, which was down roughly $1 billion.Third-Party Reimbursement Policies: The end-users of QuidelOrtho’s POC products are primarily physicians and other healthcare providers. In the United States, healthcare providers like hospitals and physicians who purchase diagnostic products generally rely on third-party payers (mainly private health insurance plans, federal Medicare and state Medicaid) to reimburse all or part of the cost of the procedure. QuidelOrtho’s products will be affected if physicians and other healthcare providers do not receive adequate reimbursement for the cost of the company’s products from their patients’ third-party payers.Estimate TrendQuidelOrtho is witnessing an upward estimate revision trend for 2024. In the past 30 days, the Zacks Consensus Estimate for its earnings has increased 3 cents to $1.78 per share.The Zacks Consensus Estimate for the company’s fourth-quarter 2024 revenues is pegged at $702.3 million, indicating a 5.4% decline from the year-ago quarter’s reported number.Key PicksSome better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 10.4% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 37.2% year to date compared with the industry’s 6.7% growth.AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.AngioDynamics’ shares have lost 8.9% year to date against the industry’s 6.7% growth.Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 56.5% year to date compared with the industry’s 6.7% growth.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AngioDynamics, Inc. (ANGO): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis Report QuidelOrtho Corporation (QDEL): Free Stock Analysis Report Globus Medical, Inc. (GMED): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks