Atlanta, Aug. 20, 2020 (GLOBE NEWSWIRE) -- This modern era is one of news outlets and companies releasing false information to create false narratives. It has become so commonplace that Twitter is even fact-checking the current President of the United States of America. Sheesh! He is the one who popularized the term “Fake News.”
Is false reporting the new wave? Well, that seems be the case for websites like Seeking Alpha who clearly reported the wrong second quarter results for Co-Diagnostics (NASDAQ:CODX). They seem to have it out big for the company, as seen in several other incorrect articles on Seeking Alpha about Co-Diagnostics after their misleading and now-corrected article that Co-Diagnostics REVENUES fell year over year, when the complete opposite is true.
Readers can see this for themselves by taking a quick gander at some of these past articles, like Co-Diagnostics Coronavirus Test Is Likely Ineffective - $1 Price Target Published Feb. 18, 2020 10:00 AM ET here, and Co-Diagnostics: Why Traders Shouldn't Take COVID-19 Stocks Too Seriously Published Jun. 1, 2020 8:39 PM ET here, and then comparing the content with the very real and quantifiable success of CODX so far this year.
The Numbers Tell the Story
Headlines concerning Co-Diagnostics this last week have all centered around one thing: “CODX misses estimates.” And despite its laudable achievements, the company did miss on revenue (~$3 million shy of $27 million) and EPS ($0.43, as opposed to $0.51, depending on the forecast). But that is only part of the story.
When Co-Diagnostics announced in the middle of Q2 that it had brought in $1.5 million for Q1 (alone impressive, given its revenue for the entirety of 2019 was in the neighborhood of $250,000), and that it had seen mid-quarter revenue in the $16 million range, the market had to guess where CODX was going to go from there. And guess is exactly what they did. This is not a company with years of profitability, with one successful quarter after another displaying a predictable pattern of where it will go next. So, analysts looked at the numbers, closed their eyes, and chose some figures. They could have just as easily guessed lower, but they did not. If they had, CODX headlines would be blowing up about this unheard-of success story, all while posting the exact same results.
So what is more important: falling short of arbitrary analyst estimates, based on forecasts which amounted to little more than guesswork, or the fact that this company went from $61,000 of revenue in the same period last year to an astounding $12 million of EARNINGS this year?
Breaking it down even further, what does $0.43 earnings per share mean? At a very modest 20 times earnings, $0.43 stretched out over 4 quarters translates to a $34.00 stock price. $14.53 per share makes CODX trading at an extremely undervalued 8.4 times earnings. Based on the Q2 results, CODX is incredibly fundamentally sound. You can bet that when the dust settles, fund managers looking for a company that is undervalued based on pure fundamentals will recognize this fact.
CODX announced in their recent earnings call release that they have recorded $50 million in sales orders YTD so far, which was regarded by some as a little opaque. What does this figure mean? Company revenue YTD by the end of Q2 was $25.5 million, and the CFO reported in their recent earnings call that Q3 revenue to date was $8 million. This leaves a balance of $16.5 million worth of sales in process for the quarter to date. What is more, in response to a question by an analyst in that call regarding whether sales are slowing down, the CFO indicated that the opposite is true, and sales volume is ramping up. So depending on the length of the sale cycle and other orders yet to be taken for the quarter, it is possible to see revenues equivalent to Q2. Even in the event COVID-19 sales dip in the summer before the ramp-up to flu season, it is important to keep in mind that CODX profits are driven by their robust coronavirus test margins of 70%. This is going to be a profitable company for the foreseeable future and beyond, something several of their competitors could only dream of saying.
Among the reasons to be excited about revenues throughout the end of the year is the company’s respiratory disease panel that they discussed as part of their earnings announcement. Put the Flu A, Flu B, and COVID-19 “ABC” respiratory panel in perspective: as important as the coronavirus test has been for CODX, companies like GenMark and BioFire have made tremendous volumes of sales of tests for respiratory diseases for years. We know a need for such a product exists, because no less than the CDC itself thinks so as well. This is a market from which CODX now stands to see even more revenue, especially with its growing network of CLIA lab customers.
Speaking of CLIA customers, it was reported over the weekend that Los Angeles-area schools are planning on testing 700,000 students and 75,000 employees. Buried deep at the end of that article are the two companies who will be performing the tests, one of which is Clinical Reference Laboratory, in Kansas. Followers of CODX will immediately recognize CRL as the company that recently announced it had received FDA EUA for a self-collected saliva-based coronavirus test, which is analyzed using CODX technology. And this sizable and respectable model for returning to school is just one contract, for just one CODX laboratory customer.
It’s no secret that the key to getting everyone back to school and work safely lies in testing, at least until a reliable vaccine has been found for a disease which continues to present one viral and epidemiological moving target after another. CODX is right at the heart of this matter. Their massive sales growth due to a high-quality, high-demand, high-margin and cost-effective product has not only transformed them into a successful, profitable, fundamentally solid diagnostics company in the COVID space, but the company predicts it will also allow them to accelerate other revenue verticals such as liquid biopsy for cancer detection. For those traders and fund managers willing to adopt a longer-term perspective, CODX may be just the investment they are looking for.
About Landon Capital
Landon Capital was founded in 2017 and has assisted hundreds of emerging growth companies to increase their shareholders and building relationships on Wall Street. We design customized programs to increase the market's interest in your company. For more information, please visit www.landoncapital.net
Safe Harbor Statement
This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. Landon Capital received no direct compensation related to this release, although Landon Capital does hold a position in the company covered above. This release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. Forward-looking statements in this release are based on information available to us as of the date hereof. Actual results may differ materially from those stated or implied in such forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," and "would" or similar words. We assume no obligation to update the information included in this press release, whether because of new information, future events or otherwise.