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GenMark Diagnostics (GNMK)
Using its patented eSensor electrochemical detection technology, GenMark develops diagnostic instruments and multiplex molecular panels. While its ePlex SARS-CoV-2 (COVID-19) test has helped drive huge gains, 110% in the last month, some members of the Street believe its future is only getting brighter.
Back in March, the company announced that its test had been granted FDA emergency use authorization (EUA). The test can be run on GNMK's ePlex system, and each test is expected to be priced at around $110. Part of the excitement surrounding the test is related to its speed, with it able to produce results in 90 minutes. Not to mention 96 tests can be run in eight-hour shifts.
Thanks to the massive level of interest, the test was widely expected to serve as a significant tailwind for the company in 2020. Based on GNMK’s preliminary Q1 2020 results, this appears to have been the case. In its preannouncement, GNMK reported Q1 revenue grew 80% year-over-year to hit $38.7 million, flying past the Street’s $26.4 million (23% year-over-year growth) estimate. Adding to the good news, the company is slated to see some serious gross margin expansion. We’re talking about 40% here.
Even though these figures are certainly impressive, BTIG analyst Sung Ji Nam notes that there are a few important factors to consider. First and foremost, RP demand had more of an effect on revenue than the COVID-19 tests. “While we expect continued tailwind for COVID-19 testing near-term, we are more encouraged by the strong ePlex placements in the quarter which bode well for GNMK's core syndromic panel testing business both in the near term and longer-term,” he stated.
As for the second, Nam commented, “Full year revenue guidance was raised to 27-39% growth vs. 14-25%, previously: While the full-year revenue guidance was raised by the 1Q beat, GNMK has better visibility than most for its business near term and is well-positioned for the remainder of the year, in our view, given the strong momentum for the RP panel and COVID-19 testing. GNMK is also currently developing an ePlex RP2 Panel that will include the SARS-CoV-2 viral target with funding from BARDA (up to $749,000), which the company expects to have available for the next flu season.”
With GNMK continuing to expand its test menu in sydromic panel testing and its solid standing in a rapidly growing segment of the IVD market, the deal is sealed for Nam, as he reiterates a Buy rating on the stock. (To watch Nam’s track record, click here)
Like Nam, the rest of the Street has high hopes for this stock. GNMK’s Strong Buy consensus rating breaks down into 4 Buys and 1 Hold issued in the last three months. (See GenMark stock analysis on TipRanks) |
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