For Immediate Release
Chicago, IL – February 11, 2021 – Zacks Equity Research Shares of Meridian Bioscience, Inc. VIVO as the Bull of the Day, CRISPR Therapeutics AG CRSP as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tilray, Inc. TLRY and Uber Technologies, Inc. UBER.
Here is a synopsis of all four stocks:
Bull of the Day:
Meridian Bioscience is a $1 billion provider of diagnostic test kits for gastrointestinal and respiratory infectious diseases. The company is expected to grow sales 32% this year to $335 million.
And after reporting a strong beat-and-raise quarter last week, analysts had to boost their EPS estimates over 30% from $1.24 to $1.63. So VIVO is back to a Zacks #1 Rank, sporting a projected 52% rise in profits.
I wrote about VIVO in early January and said it wasn't too late for investors to grab hold of this profit rocket near $20 per share...
"Bottom line on VIVO: I always pay attention to small companies growing their sales rapidly as they could become acquisition targets by larger biopharma or MedTech players. Buying VIVO near $20 offers excellent risk/reward, with or without an M&A suitor."
And then last week, right before the company report, I produced a video and article where I talked about why the COVID-19 testing stocks were under-appreciated given their fantastic growth...
Biotech Bonanza: COVID Launches Science at Warp Speed
Well here we are as VIVO pushed to 13-year highs above $30 with the earnings surprise and strong upside guidance.
Following the quarterly report, Piper Sandler analyst Steven Mah, a consistently bullish VIVO fan, raised his price target on Meridian Bioscience to $34 from $26 and reiterated an Overweight rating. Mah believes the company guidance was once again "very conservative" citing management's "pragmatic approach given the limited visibility on the durability of COVID-19 tailwinds."
Mah explained his increased confidence in Meridian's longer-term COVID-19 tailwinds given the Biden Administration's testing stance, slower than expected vaccine rollout, and new strain emergence.
Meridian Under the Microscope
Meridian Bioscience develops, manufactures, distributes, and sells diagnostic test kits primarily for gastrointestinal and respiratory infectious diseases, and elevated blood lead levels worldwide. The company operates through Diagnostics and Life Science segments. They describe their mission as helping providers make better diagnostic decisions with a focus on gastrointestinal, neonatal, pediatrics, and respiratory conditions.
The Diagnostics segment offers testing platforms, including real-time PCR (polymerase chain reaction) amplification under the Revogene brand; isothermal DNA amplification under the Alethia brand; lateral flow immunoassay using fluorescent chemistry under the Curian brand; rapid immunoassay under the ImmunoCard and ImmunoCard STAT! brands; enzyme-linked immunoassays under the PREMIER brand; anodic stripping voltammetry under the LeadCare and PediaStat brands; and urea breath testing for H. pylori under the BreathID brand.
Diagnostic Players Find New Life Under COVID
I have written often in the past few months of specialized diagnostic companies like Quidel and Hologic as they build new revenue streams from SARS-CoV-2 testing. These revenue streams are likely sustainable as the virus mutates and requires modified tests.
And I recently bought shares of VIVO for the Zacks Healthcare Innovators portfolio because I liked the growth outlook for this small player in a rapidly expanding market for rapid diagnostics -- including coronavirus testing which will continue to be part of our lives for years to come, even with vaccines.
While Meridian Bioscience is a David among diagnostic Goliaths, its long and fascinating history surprised me. From the company website...
In 1977, Bill Motto founded Meridian Bioscience on a $500 investment in his Cincinnati home’s basement. Meridian’s first product was distributing a rapid fungal test developed by the University of Kentucky. While calling on his hospital and research customers, Bill noticed there was no easy, clean way to transport patient samples. He developed the innovative Para-Pak stool transport system to meet this need.
As the product line grew, so did Meridian’s research and development, leading to a breakthrough in 1982 with a 10-minute rapid test for strep throat. Before the Meridian test, doctors would have to wait for two to three days for a culture result. Innovation continued as the company brought several cutting edge diagnostic technologies to market, including a DNA testing platform and first-of-their-kind tests for C. difficile, E. coli, H. pylori amongst others.
The new bottom line on VIVO: I continue to hold the shares and would recommend new positions between $25 and $27 looking for new bull market highs above $30 by June.
Disclosure: I own shares of QDEL, HOLX, and VIVO for the Zacks Healthcare Innovators portfolio.
Bear of the Day:
CRISPR Therapeutics is one of my favorite biotech companies as the big leader among gene-editing pioneers.
But I had to let the stock go -- right before shares launched into the December ASH meeting (American Society of Hematology) -- because analysts were so bearish on the outlook for when the R&D pipeline would produce any revenues, much less profits.
Of course, talking about revenues and profits for world-changing, early-stage medical science is almost always a non sequitur.
Still in late summer, I let go of my CRSP shares for a 71% gain. But as I describe in this September video and article, it was not the first, nor the last, of great trading gains in the greatest of CRISPR companies...
CRISPR Stocks: Buy or Trade?
So why did CRSP launch from $110 to $210 in December and January?
It was mostly about investors recognizing that the company's early data in treating debilitating illnesses like Sickle Cell Disease (SCD) could indeed become world-changing for millions afflicted with the genetic impairment to their red blood cells.
SCD comprises a group of disorders that cause red blood cells to become misshapen and break down. Red blood cells contort into a sickle shape, and die early, leaving a shortage of healthy red blood cells (sickle cell anemia), and can block blood flow causing pain (sickle cell crisis). Infections, pain, and fatigue are symptoms of sickle cell disease. Current treatments include frequent medications, blood transfusions and, in extreme cases, a bone-marrow transplant -- but no cures.
As Antonio Regalado wrote in the MIT Technology Review wrote last week, "The burden of sickle-cell, an inherited disease that shortens lives by decades (or, in poor regions, kills during childhood), falls most heavily on Black people in equatorial Africa, Brazil, and the US. HIV has also become a lingering scourge: about two-thirds of people living with the virus, or dying from it, are in Africa."
I explained some of this potential in this vlog on December 10...
CRISPR Gene Editing: Owning the Future of Medicine
A secondary "igniter" of all CRISPR stocks launching higher in Dec-Jan (besides my video commentaries linked above) was the investment activity of Cathie Wood and her revolutionary ETF firm ARK Invest.
I produced a video and article about her one-woman investor revolution in early January with her monster ETFs ARK Innovation:
How Cathie Put the Wood to Wall Street: TSLA, SQ, ROKU, CRSP, BIDU
There will be a time to buy CRSP again. But as with all emerging Biotechs, you sometimes have to wait for the next clinical data catalyst -- or an M&A one.
I'm betting the latter is the sooner driver of the next move from a $10 billion market cap to a $20 billion one.
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the Healthcare Innovators portfolio.
Tilray Bought by Reddit Crowd, Plus UBER's Q3 Report
Markets continued to hover close to the zero-line as of Wednesday’s close, with just the Dow finishing in the green among major indexes. The blue-chips rose 0.20% for a new all-time high, while the Nasdaq, S&P 500 and Russell 2000 all took a breather: -0.25%, -0.03% and -0.72% on the day.
One of the major “pot stocks” we discussed yesterday in this space, Tilray, continues its big run in what looks more like the latest short-squeeze stock, with Reddit groups now piling into the marijuana-based pharmaceutical company of late. Shares shot up another 51% Wednesday, following a +44% performance yesterday; Tilray is now up 400% in just the last month alone.
For sure, increased acceptance in U.S. states and countries around the world are a reason for the stock to do well. However, its market cap has more than doubled and the company has no P/E because it is forecast for negative earnings both in the upcoming quarterly report and full fiscal year. Tilray is up another 10% in late trading, up near $71 per share. This stock was trading at $19 per share on February 1st.
Uber followed a nice 6% bump in regular-day Wednesday trading with a worse-than-expected fiscal Q3 report, missing on the bottom line by a penny to -54 cents per share (though still better than the -64 cents the company reported in the year-ago quarter). Revenues grew $3.17 billion in the quarter, well off the expected pace of $3.55 billion in the Zacks consensus. Yet shares are only selling off minimally in the after-market; the company still says it’s on track to its profitability goal in 2021.
Though Uber posted a net loss per year of $6.8 billion on ride-sharing revenues down 52% year over year, its Uber Eats delivery service grew 224% in its fiscal Q3. Monthly active platform consumers gained a million more than predicted in the quarter, +93 million. And when one figures in the ride-sharing comeback seemingly inevitable as the Covid-19 pandemic is finally beaten back with vaccinations, we see that Uber looks to have weathered its worst-possible storm and survived. For more on UBER's earnings, click here.
Speaking of the coronavirus, nearly 45 million vaccination doses have now been administered, and the post-holiday season peak now looks to have been successfully scaled. We are now back to 7-day case rates back where they were in October and, importantly, pointed in the right direction. More than 27 million Americans have reportedly contracted Covid-19, leading to more than 466K fatalities. More good news: the death rate is now flat for those who’ve gotten the worst of the disease.
Questions or comments about this article and/or its author? Click here>>
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