Not many expected the New Year to start with tightened COVID-19 restrictions.  The U.K. has already stepped into the third lockdown despite the extensive rollout of vaccines. In the United States, following the holiday season and the Capitol Hill riot last week, many market watchers apprehend imposition of widespread restrictions across the country once again.

Arizona yesterday reported record number of deaths. Washington has already extended public emergency for 15 days.

Abbott in Limelight

Given the relentless surge in COVID-19 cases over the past couple of months, diagnostic laboratories are almost on the verge of succumbing to the enormous pressure of developing COVID-19 test kits. Amid this, Abbott’s ABT endeavor to complete the supply of 150 million BinaxNOW COVID-19 tests by this week has come as a major respite for the government.

We note that through a combined initiative of the U.S. Department of Health and Human Services (HHS) and the Department of and Defense (DOD), the government, in August, decided to buy 150 million of Abbott’s $5 rapid antigen test for COVID-19. Abbott also promised to continue supplying HHS with a total of 30 million tests till March 2021.

The HHS expects the supply of BinaxNow kits to significantly boost the testing capacity of the nation. These kits will be distributed through HHS to different states, territories and targeted entities like nursing homes, assisted living facilities, home health and hospice agencies, historically black colleges and universities (HBCUs), and the Indian Health Service (an operating division within the HHS).

Testing Space Grabs the Spotlight Again

Both in terms of diagnostic tests (molecular and antigen) and antibody tests to detect SARS-CoV-2, diagnostic testing companies have invested billions of dollars so far. Though it was initially assumed that once vaccines are rolled out, the demand for testing will decline, the ongoing resurgence in cases has put the focus back on the testing space.

Needless to say, it's once again time for investors to keep a close eye on suitable stocks from the space for robust portfolio gains going ahead.

A Hot Lineup

In December 2020, the FDA granted Emergency Use Authorization (EUA) to Ellume Health’s COVID-19 Home Test as the first over-the-counter fully at-home diagnostic test. Notably, as part of this Australian company’s global COVID-19 partnership with QIAGEN QGEN, it is developing COVID-19 tests. Prior to that, Ellume launched Access Anti-SARS-CoV-2 Total test under the collaboration with QIAGEN. Qiagen carries a Zacks Rank #2 (Buy).

One-Year Price Performance

Meanwhile, competing against Abbott’s rapid antigen test, Quidel Corporation QDEL recently gained EUA for its QuickVue SARS Antigen test. This point-of-care assay for the rapid, qualitative detection of the nucleocapsid protein antigen from SARS-CoV-2 in anterior nares (NS) swab specimens, requires no supplemental instrumentation and is visually read. We note that this Zacks Rank #1 (Strong Buy) company was the first to achieve the FDA’s EUA for its rapid antigen test Sofia 2 SARS Antigen FIA in May.

Again, Becton, Dickinson and Company’s or BD BDX Veritor antigen test is claimed to directly compete with Quidel’s Sofia kit. This rapid antigen test received EUA in July. BD carries a Zacks Rank #3 (Hold) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

In terms of molecular diagnostics and antigen tests, Hologic HOLX has earned a lot of public attention over the past few months. The company generated solid third-quarter revenues from strong customer adoption of Hologic’s SARS-CoV-2 assays that run on the Panther and Panther Fusion systems. This Zacks Rank #1 company, in October, announced the amendment of the EUA that was initially received for its Aptima SARS-CoV-2 assay (that runs on the company’s fully automated Panther system) in May.

Quest Diagnostics DGX another major player in COVID-19 testing space performed more than 22 million COVID-19 molecular and serology tests .per its last update. This Zacks Rank #3 company registered significant top-line contribution from COVID-19 testing during the last-reported third-quarter 2020, performing approximately 9.9 million molecular tests and 1.5 million serology tests.

LabCorp LH too is providing tough competition to the testing players with its efforts of testing capacity expansion. We note that LabCorp was the first commercial lab to launch PCR testing on Mar 5, just after the FDA liberalized EUA rules for testing. Since then, this Zacks Rank #3 stock has rapidly expanded both, capacity and accessibility for testing. Till the time of the third-quarter earnings release, the company performed approximately 22 million COVID-19 tests, which included about 19 million PCR tests and over 3 million antibody tests.

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