Shares of QuidelOrtho (QDEL -32.20%) were crashing 31.4% lower as of 11:30 a.m. ET on Wednesday. The huge decline came after the in vitro diagnostics company announced its 2023 full-year and fourth-quarter results following yesterday’s market close.
QuidelOrtho reported Q4 revenue of $743 million, down 14% year over year. Although non-respiratory sales rose 9%, the gain was more than offset by respiratory revenue sinking 49% lower.
The company posted adjusted earnings in the fourth quarter of $78.6 million, or $1.17 per share. This reflected a decline of nearly 34% year over year. It also was well below the average analyst estimate of $2.05 per share.
Why QuidelOrtho’s disappointing Q4 results weren’t the company’s worst news
Sinking revenue and earnings are bad for any company. However, QuidelOrtho had even worse news than its Q4 results.
The company projects total revenue in 2024 of between $2.76 billion and $3.07 billion. The midpoint of that range reflects a decline from the $3 billion in revenue generated in 2023. QuidelOrtho expects full-year adjusted diluted earnings per share of between $2.40 and $3.07. Analysts’ average estimate before the Q4 update was for adjusted EPS of $5.07.
Wall Street moved swiftly in reaction to QuidelOrtho’s dismal results and guidance. Analysts from JPMorgan Chase, Raymond James, and William Blair downgraded the genetic testing stock on Wednesday.
Is QuidelOrtho stock a good pick to buy on the pullback?
Some stocks offer great buying opportunities when they fall. I don’t think that QuidelOrtho is one of them.
At first glance, QuidelOrtho’s forward earnings multiple of 13x might look attractive. However, with earnings continuing to decline, I wouldn’t place too much confidence in the seemingly cheap valuation.
The dynamics for the company are different than they were a couple of years ago — and not in a good way. My view is that investors are better off waiting on the sidelines to see if QuidelOrtho can turn things around. In the meantime, there are other stocks with much better risk-reward profiles.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and QuidelOrtho. The Motley Fool has a disclosure policy.
