Genetics: Preparing for survival after a hangover from Covid (NASDAQ: FLGT)

A young woman drops a swab into a protective plastic tube.

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“I used to profess my loyalty and I don’t think there was one person I loved that I didn’t betray in the end. – Albert Camus, The Fall

Today, we put Fulgent GeneticsNasdaq:FLGT) in the spotlight. The company owns He was a huge beneficiary of the pandemic. Covid-19 testing revenue boosted a thirteen-fold increase in overall sales in the company’s fourth-quarter 2020 earnings Report As a good example of utility scale. After that, the stock went from $10 a share in March 2020 to $160 in January 2021.

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However, with pandemic fears subsiding significantly recently, the stock has sold about 45% since late last year and is down about two-thirds from its all-time high. Is it time to pool some stock in this diagnostic test concern? Analysis follows below.

Company Profile:

Fulgent Genetics provides many testing and testing services and is based just outside of Los Angeles. Its product portfolio includes Covid-19, molecular diagnostics and genetic testing. As mentioned above, the majority of revenue comes from Covid-19 testing, specialty oncology and other testing is what the company calls “essenceThe revenue-generating part of the company.

Test capabilities

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The stock sells for approximately $58.00 per share and has an approximate market capitalization of $1.75 billion.

Company History

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First quarter results:

On May 3, Fulgent published the first quarter Preparation. The company reported non-GAAP earnings of $5.12 per share on revenue of $320 million. The bottom line and top results easily exceed expectations. Earnings per share from GAAP were $4.83. Revenue was down from about $360 million in the same period last year, solely as a result of a drop in Covid testing. “Core” revenue rose 59% to $25.1 million. Management raised its full-year guidance to sales of $660 million, but lowered the entire year’s non-GAAP income to $6.00 per share.

Quarterly highlights

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Soon after the quarter closed, Fulgent acquired Inform Diagnostics, an independent national pathology laboratory based in Irving, Texas, for $170 million.

Notify the acquisition of diagnostics

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Fulgent Genetics also purchased CSI Laboratories in 2021.

Buy CSI parameter

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This prompted the leadership to raise their estimates of “essenceRevenue in fiscal year 2022 to approximately $175 million from $120 million previously. When earnings were called in early May, leadership raised its base revenue estimate to $180 million.

forward steering

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Analyst Comment and Balance Sheet:

Despite the decent market value, Fulgent Genetics doesn’t get much attention from Wall Street. on January 25, maintenance Buy rating on FLGT but lowered the target price from $141 to $125 per share. In late May, Piper Sandler Reissued Purchase evaluation after meeting with management. Piper Analyst stated that:

Impress with the company’s core growth, COVID potential, and “electives” with $1.1 billion in cash. The analyst believes Fulgent is positioning itself to add growth through acquisitions, especially as other labs struggle with cash management.. “

Those are the only two analyst firm ratings I find on the company so far in 2022. Roughly seven percent of the pending float is currently short. Many insiders have been repeat but small stock sellers lately. So far, they’ve disposed of just over $300,000 in stock in total. There has been no insider buying of stocks in more than three years.

balance sheet

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The company’s balance sheet is in solid shape, ending the first quarter with nearly $1.1 billion in cash and marketable securities. A portion of this cash tank was used to purchase Inform Diagnostics in April, as previously reported. The company also announce A $250 million share purchase license in March.

Verdict:

The bigger question about Fulgent is how quickly revenue from Covid-19 testing will decline in the coming quarters and years. After purchasing Inform Diagnostics, the company has just over $900 million in net cash on hand. This makes the stake priced at just over five times crawRevenue, with plenty of choice around sales of Covid tests in 2023 and beyond.

Comprehensive diagnostic platform

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I expect Fulgent will continue to use its cash stock to further the strategy’bolt on“Acquisitions in the coming quarters/years as it builds a comprehensive diagnostics platform. It is impossible to predict how quickly revenue for Covid testing will decline in the future. However, core revenue is growing smart, and the company has a solid balance sheet. As stocks seem to be building a base here, they have I took a small part”watch item‘Holding in Fulgent this week using Covered invitation Requests as options in the name are fluid and profitable.

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“We men and women are all in the same boat, on a raging sea. We owe each other a terrible and tragic loyalty.– JK Chesterton