On Monday, Jefferies began coverage on Quidel Corp . (NASDAQ:QDEL), a diagnostic healthcare manufacturer, assigning a Hold rating and setting a price target of $43.00. Trading at $40.53, the stock has declined 48.17% year-to-date. The firm acknowledges the company's progress under the leadership of CEO Brian Blaser, including over $100 million in cost reductions and a restructured leadership team.
Despite these efforts, Jefferies notes that Quidel's journey to improve its financial performance is ongoing and not without challenges. According to InvestingPro, the company operates with a significant debt burden, though net income is expected to grow this year.
Quidel, known for its point-of-care diagnostic products such as QuickVue and Sofia, is undergoing a transformation following a period of post-COVID disappointment and the integration of Ortho Clinical Diagnostics. With a market capitalization of $2.71 billion and a gross profit margin of 47.57%, Jefferies highlights the strengths of the legacy Ortho franchise, including market leadership and potential for margin growth.
However, the firm points to several risks that warrant a cautious stance, including uncertainties in the point-of-care and respiratory businesses, potential impacts from exiting the donor-screening market, and delays in the release of new diagnostic panels for its Savanna system.
The analyst firm points out that Quidel's stock is trading at less than 9 times the estimated 2025 EBITDA, which is a significant discount compared to its peers. InvestingPro's Fair Value analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
While this valuation suggests the stock could have upside potential, Jefferies remains prudent due to the narrow timeframe for the new CEO to address Quidel-specific hurdles amid a challenging macroeconomic environment.
Jefferies' position reflects a conservative outlook on Quidel's ability to achieve mid-single-digit growth and maintain consistent operating margin expansion (OPMX). The firm's initiation of coverage with a Hold rating and a $43 price target takes into account the current restructuring efforts, market position, and the potential for improvement against the backdrop of various operational risks.
With analyst targets ranging from $38 to $64, investors seeking deeper insights into Quidel's financial health and growth prospects can access detailed analysis through InvestingPro's comprehensive research tools.
In other recent news, QuidelOrtho Corporation reported its third-quarter earnings for 2024, revealing a revenue of $727 million and adjusted EBITDA of $171 million. The company's adjusted diluted earnings per share (EPS) was reported at $0.85. These results come amidst leadership changes, including Jonathan Siegrist as the new CTO and Lee Bowman as CHRO, as the company targets a $100 million cost savings by mid-2025.
In addition, QuidelOrtho's CFO, Joseph M. Busky, has seen a significant increase in his base salary, reflecting his expanded role and new IT duties. The company's board of directors confirmed this increase from $586,328 to $680,000, aligning compensation with the scope of executive duties.
For the full year of 2024, QuidelOrtho expects a revenue between $2.75 billion and $2.80 billion, and an adjusted diluted EPS between $1.69 and $1.91. These recent developments highlight the company's strategic changes and commitment to improving operational efficiency.
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