QuidelOrtho (QDEL, Financial) saw a notable gain of over 10.26% on Thursday, driven by an analyst upgrade. The S&P 500 index, in contrast, declined by 0.3%.
Analyst Bill Bonello from Craig-Hallum upgraded QuidelOrtho (QDEL, Financial) from a hold to a buy rating. He also increased his price target for the stock to $57, up from $40.
Bonello believes that QuidelOrtho (QDEL, Financial) has significant potential to enhance its fundamentals. He projects the company's revenue to grow at mid-to-high single-digit percentages by 2027 and expects its EBITDA margins to reach the mid-to-high 20% range.
Despite these optimistic projections, QuidelOrtho (QDEL, Financial) has reported net losses in four of its five most recent quarters, which may be a concern for some investors.
As of now, QuidelOrtho’s stock is priced at $44.50. The company is currently facing several financial challenges as indicated by its Altman Z-Score, which is in the distress zone at 0.14. This implies a potential bankruptcy risk within the next two years.
The company’s financial health is further scrutinized with a Piotroski F-Score of 2, indicating poor business operation efficiency. Additionally, the gross margin has been in decline, averaging a 3% decrease per year. The operating margin over the past five years has also been in decline at an average rate of 9.4% per year.
Moreover, QuidelOrtho has been experiencing revenue declines over the past 12 months, and its EBITDA margins stand at -47.28%. The company’s return on invested capital (ROIC) is 1.36%, which is significantly lower than its weighted average cost of capital (WACC) of 7.46%, indicating inefficient capital use.
On the positive side, the Beneish M-Score of -2.48 suggests that the company is unlikely to be a manipulator of its financial statements. Furthermore, despite the financial struggles, the GF Value of QuidelOrtho indicates it could be a potential value trap, recommend investors to think twice. The GF Value is currently estimated at $63.76, showing a possible undervaluation given the current price.
Institutional ownership of QuidelOrtho stands at 95.12%, showing strong institutional interest. However, insider transactions reveal 21 insider selling transactions in the past three months with no insider buying, which could be a red flag for potential investors.
For a detailed analysis, you can visit the QuidelOrtho GF Value page.
