While so many businesses have suffered at the hands of COVID-19, Maxim analyst Jason McCarthy believes diagnostics specialist Biocept (BIOC) has managed to turn the narrative on its head and will exit the pandemic stronger than before.
That’s not say the company has been immune to the virus’ effects. Biocept’s latest quarterly report reflected COVID-19’s negative impact on the company’s oncology testing volumes. With revenue coming in at $0.92 million, the figure missed the estimates by $0.38 million and indicated a 22.7% year-over-year drop. Oncology tests were down by 16% year-over-year.
But McCarthy’s claim is based on Biocept’s recent entry into the coronavirus battlefield, where Biocept has begun providing much needed testing kits.
So far, Biocept has collected 11,000 samples, at a run rate of roughly 3,000 a week, while at the same time sourcing components to put together 50,000 testing kits. As each test brings in $100, the commercial opportunity is not to be sniffed at. In contrast to many companies who have reduced staff during the pandemic, Biocept has been hiring extra hands to help meet the demand.
Furthermore, with fall/winter around the corner and Covid showing no signs of fading even during the summer months, the virus, McCarthy says “could be a significant revenue driver in both the near- and long-term.”
Add into the mix a balance sheet of $24 million in cash, and recently strengthened by warrant exercises which should provide at least another year of operating capital, and McCarthy believes the future looks bright for this new COVID-19 diagnostics player.
“While the quarter was disappointing, we anticipate COVID-19 testing to offset the decline in oncology testing in 2H20. Importantly, cancer has not 'quarantined' and we anticipate oncology testing to return, and COVID-19 testing is likely here to stay. We expect that unlike (and unfortunately so) many businesses across America, which have declined and/or shut down, Biocept could actually come out of the pandemic even better positioned in the testing space than it was before,” the 5-star analyst concluded.
Accordingly, McCarthy reiterated a Buy rating on BIOC shares, and doubled his price target from $1 to $2. The potential upside from current levels is a hefty 121%. (To watch McCarthy’s track record, click here)
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