Last week was quite a roller-coaster ride for Biocept (BIOC) investors.
On Thursday, shares of the microcap molecular oncology diagnostics company rocketed 25%, delivering shareholders windfall profits after Biocept announced that it has now received more than 100,000 patient samples to process for COVID-19 testing through its RT-PCR (reverse transcription polymerase chain reaction) machines.
Committing to “providing this important service during the pandemic and we continue to return the vast majority of COVID-19 test results to our customers within 48 hours of receiving a sample,” Biocept regaled investors with tales of how “COVID-19 RT-PCR testing will have a significant positive impact on our revenues through the remainder of the year and continuing into 2021.”
But then the closing bell struck, and Biocept reported its actualfinancial results for Q3 2020 — a net loss of $4.9 million. By the time investors finished digesting that number, Biocept stock had given back all of the gains its stock had made earlier in the day, and more. Although the stock fell “only” 22% Friday, this percentage decline, times a bigger stock price, left Biocept stock trading below Wednesday’s closing price at just $4.78 a share.
But were the results really that bad? Not according to Maxim analyst Jason McCarthy, they weren’t.
Biocept, noted McCarthy, reported Q3 revenues up 400% year over year at $6.6 million. True, Biocept lost money for the quarter. But its $4.9 million net loss worked out to only $0.43 per share — four cents better than the $0.47 loss per share that analysts, on average, had expected.
And in McCarthy’s view, COVID-19 testing will indeed be the growth driver than Biocept envisions. $5.7 million of the $6.6 million in revenue recorded in the quarter, after all, came from Covid testing, and that was enough to more than make up for “temporary” revenue declines in oncology testing that were “due to the pandemic” — and at positive gross margins to boot.
Every time Biocept tests a sample for Covid, notes McCarthy, it collects a $100 “reimbursement.” And “COVID testing is… continuing to grow,” says the analyst, “with the number of samples more than doubling each month over 3Q20.”
McCarthy predicts that this growth trend will continue, “as Biocept has received approximately as many samples in 4Q20 to date as they received in all of 3Q20.” (Hint: Q3 ended on Sept. 30. It’s Nov. 15 as I type this note — so 1.5 months of Q4 have seen Biocept collect as many $100-samples as it did in three months of Q3: a 100% growth rate).
Biocept collected “30K samples in September alone,” by they way, says McCarthy — $3 million when translated into revenues. If samples keep arriving at the rate they are currently — much less double — that would seem to imply at least $9 million in Covid testing revenue in Q4. For the record, McCarthy is only modeling for $11.4 million, plus about $900,000 in other revenues, so a total of $12.3 million. But other Wall Street analysts on average have Biocept down for just $3.5 million in revenue this quarter.
If McCarthy’s right, Biocept could end up blowing that estimate entirely out of the water — and Q4 could be a real blowout of an earnings surprise.
To this end, McCarthy doubles down on his “buy” recommendation on Biocept stock, and his $200 price target, too. (To watch McCarthy’s track record, click here)
It has been relatively quiet when it comes to other analyst activity. In the last three months, only 2 analysts have issued ratings. However, as they were both Buys, the word on the Street is that BIOC is a Moderate Buy . Based on the $7 average price target, shares could climb 11% higher in the next twelve months. (See BIOC stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.