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Here's Why You Should Hold on to QIAGEN (QGEN) Stock for Now

QIAGEN N.V. QGEN has been gaining on robust segmental growth and a slew of product launches. Its impressive international performance and strong revenues in the fourth quarter of 2020 buoy optimism. However, downsides may result from its reliance on commercial relationships and a stiff competitive landscape.

Over the past year, the Zacks Rank #3 (Hold) stock has gained 29.7% versus 1.3% fall of the industry it belongs to and 51.2% rise of the S&P 500.

The renowned molecular diagnostics solutions provider has a market capitalization of $12.02 billion. The company projects 17.8% growth for the next five years and expects to maintain strong segmental performance. The company surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in another, the average surprise being 1.41%.

Let’s delve deeper.

Product Launches: We are upbeat about QIAGEN’s recent product launches. The company, this month, announced the launch of its QIAseq DIRECT SARS-CoV-2 Kit. The kit is a viral genome enrichment and library preparation solution that significantly lessens library turnaround times and plastic use unlike the ARTIC project protocols (primer-based approaches for next-generation sequencing).

The company, in March, launched QIAsphere cloud-based solutions to strengthen the scope in digital diagnostics with its syndromic testing platform, QIAstat-Dx. The same month, QIAGEN announced the launch of QIAcube Connect MDx platform for automated sample processing in molecular diagnostic laboratories, which will now be available in the United States and Canada, the European Union, and other markets globally.

Collaborations to Add Value: We are optimistic about the collaborations entered into by QIAGEN over the past few months. The company extended its partnership with INOVIO Pharmaceuticals INO in February with a new master collaboration agreement to develop liquid biopsy-based companion diagnostic products based on next-generation sequencing technology to complement INOVIO’s therapies.

In November 2020, QIAGEN entered into a strategic collaboration with BioNTech SE with the aim of developing and commercializing a tissue-based therascreen test as a companion diagnostic.

Strong Q4 Results: QIAGEN’s robust results in the fourth quarter of 2020 instill optimism. Its revenue growth across all geographies and both operating segments in the fourth quarter was impressive. Uptick in sales for product groups used in COVID-19 response drove the top line. During the quarter, robust orders for the QIAcuity series of digital polymerase chain reaction or PCR platforms and FDA’s Emergency Use Authorization for the use of saliva samples collected with the NeuMoDx Saliva Collection Kit were also encouraging. Adjusted operating margin expansion and a raised full-year outlook were impressive as well.

Downsides

Reliance on Commercial Relationships: The future level of sales for companion diagnostics depends, to a high degree, on the commercial success of the related medicines for which the tests have been designed. Further, risks remain that the company may be unable to maintain these relationships and its collaborative partners may pursue or develop competing products or technologies, either on their own or in collaboration with others.

Stiff Competition: QIAGEN is facing intensifying competition from firms providing pre-analytical solutions and other products used by QIAGEN’s customers. The markets for some of the company’s products are very competitive and price sensitive as well.

Estimate Trend

QIAGEN has been witnessing an upward estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2% north to $2.50.

The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $555.3 million, suggesting a 49.2% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks from the broader medical space are Align Technology, Inc. ALGN and Baxter International Inc. BAX.

Align Technology’s long-term earnings growth rate is estimated at 20.8%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter’s long-term earnings growth rate is estimated at 9.3%. It currently carries a Zacks Rank #2.

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