Diagnostics Industry Stocks to Watch

COVID-19 Cases and Demand for Tests Rise

Coronavirus cases keep increasing in the United States. On Tuesday, over 60,000 infections were recorded—which was not only a single-day record, but also pushed the total US case-count to over 3 million yesterday. While the upward trend has been unnerving Wall Street, this has also caused a demand for companies that provide ways to fight and detect the virus.

More specifically, investors have been keeping a close watch on vaccine trials conducted by Moderna (MRNA), AstraZeneca (AZN), and Johnson & Johnson (JNJ) this summer. Whichever company wins the race for a successful vaccine could see its share prices jump. However, in the short term, demand for COVID-19 tests is surging. Subsequently, diagnostics industry stocks are rising.

Companies to Watch

Thermo Fisher Scientific (TMO), which makes COVID-19 testing kits, saw its second quarter revenue jump by 10%. For context, analysts weren’t expecting any growth, but instead saw the best quarterly performance for the company in two years.

Becton Dickinson (BDX) received emergency-use authorization for a COVID-19 test that will be able to deliver results in 15 minutes. The tests will cost $16, and the company plans to make up to 2 million of them per week until September. Raymond James analysts think this price point and delivery schedule could help the company generate an extra $200 million in quarterly revenue.

Abbott Laboratories (ABT) has shipped over 8 million diagnostic tests and over 12 million antibody tests in the US. The company is scheduled to report second quarter earnings next week.

Looking Ahead

Though multiple companies are rushing to manufacture and distribute diagnostic tests, they are still struggling to keep up with demand. It is especially hard for them to fulfil interest in large states where cases are rising, like Florida and Texas.

Until a vaccine is developed, it is likely that demand for COVID-19 testing will remain strong. As public health experts discuss the possibility of reopening schools in the fall, and finding ways to help economic activity stay afloat, testing is a crucial step in every plan.

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