On Feb 24, 2020, Co Diagnostics (CODX) received regulatory clearance to sell its Logix Smart Coronavirus COVID-19 Test kit as an in vitro diagnostic (IVD) for diagnosing coronavirus (COVID-19). The condition was that it could sell only in markets that accept CE-marking as valid regulatory approval.

What’s great about the development is that the kit has this marking that European nations accept as valid.

The company can – starting immediately – begin export of its kits to all markets (comprising of 30 countries) that accept the CE marking as valid. The CODX had already shipped samples of its RUO (Research Use Only) version of the kit test to distributors in Italy and Germany. The intention was to have the labs in Europe to confirm the quality of the product. Customers' acceptance of the product will be known very soon.

CODX, an underperformer so far, now seems to be well on its way to stardom. The action in the stock started from Jan 22, 2020, when it spurted from $1.11 to close at $1.83. It has not looked back since and is currently quoting $3.71 as of Feb 25, 2020 (opening hour).

Image Source: Investing.com

It does appear that CODX may be termed a frontrunner in COVID-19 diagnostics development race and seems all set to cash in on its unique product.

Side Note: Nevada-based Rapid Dx is another company that is moving fast to cash in on COVID-19 testing, Its PR claims that it is in a position to provide airport authorities COCX’s product, the Logix Smart COVID-19 detection kit. It’s unclear how far this PR effort will benefit CODX, but what’s clear is that CODX’s brand name will build some muscle.

CODX Financials & Ratings

Analysts estimate that CODX will report revenue of $2.79 million and an EPS of $−0.17 for the year ending Dec 2020.

However, these estimates would have neither factored in the COVID-19 black swan, nor CODX’s capability in creating a diagnostic kit in quick time.

 Image Source: Seeking Alpha

If CODX’s COVID-19 kit hits the bulls-eye, the company’s sales will leapfrog and every analyst estimate will bite the dust.

Authors at a financial blog have been very bearish on CODX – as of Feb 25, 2020. Though the quant rating for the stock is neutral, growth has been ranked as A+.

 Image Source: Seeking Alpha

CODX’s Products

Aside from the COVID-19 diagnostic kit, CODX also makes other products that serve the following applications:

(a) Diagnostic kits for Zika virus, Mycobacteria Tuberculosis and the ZDC (ZIKV-DENV-CHIKV) kit (used to detect viruses’ genomes in cases of Zika, dengue, and chikungunya.

(b) Control System to test mosquito populations (to help curb the spread of mosquito-borne diseases).

(c) Agricultural solutions that help make plants resistant to disease and bugs, thereby ensuring a bountiful harvest.

(d) Coprimers and the CoDx Box equipment that is powered by magnetic induction technology.

The Verdict

About a week ago, an analyst was skeptical of the company’s COVID-19 diagnostic kit. Things have taken a U-turn since and CODX has suddenly arrived at an inflection point. The company will land into a respectable league once the quality of its RUO kits is accepted by labs in Germany and Italy.

Investors must patiently track the RUO outcome. If the news is good, investors can latch on to it for the long term. If they are skeptical and want to wait for some more good news, then they can consider buying the stock in a SIP (Systematic Investment Plan). Even without factoring in the COVID-19 diagnostic kit, analysts estimate that the CODX will post an EPS of $3.64 in 2028.

I am bullish on the stock as a long-term investment either on a dip or in a SIP.