QuidelOrtho's stock loses about a third of its value after earnings miss

By Steve Gelsi

Diagnostics-equipment maker plans job cuts. Raymond James downgrades its stock, but says the company remains 'undervalued'

QuidelOrtho Corp.'s stock lost about a third of its value Wednesday after the diagnostic-products manufacturer missed its fourth-quarter profit estimate, announced job cuts, and sustained at least one analyst downgrade.

San Diego-based QuidelOrtho (QDEL) reported that its fourth quarter point-of-care revenues and molecular revenue both fell 42% due to COVID-19 headwinds, as the impact of the disease tapered off.

The company's fourth-quarter earnings of $1.17 a share fell short of the FactSet consensus estimate of $2.04 a share.

Revenue of $742.6 million also fell short of the analyst estimate of $796.9 million.

The company said it's planning to reduce head count by 5% to 6%. It reported about 7,000 employees worldwide as of Jan. 1, 2023.

QuidelOrtho's stock fell by about 35% to $43.67, its lowest level since late 2017.

Raymond James downgraded the stock to outperform from strong buy due to a "major" 28% miss in earnings before interest, taxes, depreciation and amortization (Ebitda), but said the stock still appears to be undervalued.

Analysts cut their 2024 Ebitda estimate for the company by 27%.

"We have our misgivings on this front but despite this ... we can't help but find the QuidelOrtho business to be undervalued," Raymond James analyst Andrew Cooper said. "We have long stated that the post-pandemic base being a moving target has hindered the stock, and while our base estimate moves lower we still think the core business can grow revenues at least in the mid-single digits with expanding margins."

-Steve Gelsi

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02-14-24 1053ET

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