NEW YORK ─ Investment bank Evercore ISI said on Friday that it is initiating coverage of OraSure Technologies with an Outperform rating and a price target of $22, representing a 70 percent increase compared to its closing price of $13.15 on the Nasdaq Thursday.
In a note to investors on Friday, Evercore analyst Vijay Kumar and colleagues wrote that OraSure's stock price has dropped 30 percent since its earnings release on Aug. 5 when it announced a delay until the fourth quarter in the approval of a COVID-19 antigen test. "Historically, the stock has bounced back when it has had [greater than ] 30 percent corrections, [and] we see current levels as an attractive entry point," Kumar said.
Kumar noted that OraSure is well positioned in the market for at-home antigen and antibody tests. "We believe the company has a core competency in developing these tests and COVID-19 falls in its wheelhouse," he said. The investment bank sees US Food and Drug Administration Emergency Use Authorization of OraSure's COVID-19 antigen test "as a meaningful catalyst over the coming months," he said.
OraSure is developing a COVID-19 rapid antigen in-home self-test and an ELISA-based oral fluid COVID-19 antibody test, both of which it expects to launch in the fourth quarter. The company also sells oral fluid collection devices for COVID-19 molecular testing, which account for a large portion of its revenues.
The Bethlehem, Pennsylvania-based diagnostics company recently announced that its second quarter revenues fell 25 percent year over year, which missed analysts' average estimate for the quarter.