Co-Diagnostics Inc. (NASDAQ:CODX) has had a roller-coaster 2020. While the stock is up by more than 700% for the year, it is down by close to 60% from its record highs registered in August, after a deep pullback. A rally to record highs came on investors taking note of the enormous opportunity created by COVID-19 pandemic.
Profits Prospects
The likelihood of the company turning its first-ever profit is one of the factors behind the meteoric rise over the past nine months. Founded in 2013, the molecular diagnostics company has never turned in a profit. Over the last three years, the company has lost close to $6 million annually.
Fast forward, 2020 promises to be a record-breaking year. The company has already registered a 393% increase in revenues to $25.5 million for the first six months of the year. In addition, it reported a net profit of $11.5 million compared to a net loss of $2.7 million for the same period last year.
Robust revenue growth can be attributed to, among other things, the growing rate of COVID-19 testing. Co-Diagnostics is at the heart of COVID-19 testing in the U.S thanks to the Logix Smart COVID-19 tests. Year to date, the company has enjoyed strong demand of the test kits as the pandemic shows no signs of fading away.
Likewise, gross margins on the sale of the Logix Smart COVID-19 tests have surged to 70%. The margin can only continue to improve as demand increases. Teachers and students going back to school and as workers return to offices is expected to trigger increased demand for COVID-19 test kits.
Diversified Product Portfolio
The stock has pulled lower in recent months amid growing concerns of growing competition in the testing of COVID-19 pandemic. Abbot laboratories have already unveiled a speedy and inexpensive antibody test that continues to pose significant competition.
Contrary to perception, Co-Diagnostics does not have all its eggs in one basket. The molecular diagnostics company is increasingly diversifying its product portfolio. It has already developed test kits for mycobacteria, tuberculosis, and Zika. It is also working test kits to differentiate Zika from Dengue and Chikungunya virus.