Co-Diagnostics Inc

Co-Diagnostics Inc (NASDAQ-CM : CODX) is a Utah based molecular diagnostics company having a unique PCR (Polymerase Chain Reaction) testing technology.

Investment Highlights - Co-Diagnostics Inc – Speculative Buy at USD 9.41

• The Company has shown a significant increase in financial performance in the financial year 2020, with higher cash flow from operating activities.
• In the last one year, the Company delivered a decent return of ~14.76% and delivered higher returns compared to the benchmark Index.
• As per valuation metrics, the EV/Sales and EV/EBITDA multiples of the Co-Diagnostics Inc are currently lower as compared to the corresponding multiples of the Healthcare Equipment & Supplies industry. It reflects, shares are undervalued as compared to the industry.
• From the technical standpoint, 14-day RSI is supporting an upside move (around 34 level), which means the stock price could increase in the short term.

Key Risks

• The covid-19 outbreak has resulted in supply chain and clinical trials disruptions which will have a negative impact on the Company’s performance.
• Any change in regulations and government policies could affect the overall business of the Company.

Financial Highlights – FY2020 (31 December 2020) (released on 25 March 2021)

(Source: Annual Report, Company Website) 

• For the financial year 2020, driven by higher sales of LogixSmart COVID-19 test throughout the world, the revenue increased significantly by 34580%.
• Driven by higher revenue, the profitability for the period increased significantly. The Company’s reported gross profit and net income increased significantly by 56424% and 786%, respectively.
• The cash balance as on 31 December 2020 increased to $42,976,713 (31 December 2019: $893,138).

One Year Share Price Chart

(Source: Refinitiv, Thomson Reuters)

Conclusion

The Company has shown a significant increase in financial performance in the financial year 2020. Both the revenue and profitability margins for the period increased. The Company witnessed an improvement in liquidity position along with well-positioned balance sheet. Co-Diagnostics believe that existing capital resources and cash generated from sales will be sufficient to meet next 12 months operating requirements. The Company expects available capital resources may be consumed more rapidly and it is looking to raise additional capital for strategic opportunities. Despite the impact of covid-19 on world economy, the Company is focused on driving growth across platform and executing business objectives. The stock made a 52-week low and high of USD 7.86 and USD 30.99, respectively.

Based on the decent growth prospects, we have given a “Speculative Buy” recommendation on Co-Diagnostics Inc at the closing price of USD 9.41 (as on 5 April 2021).

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