Abbott Laboratories spiked 22% in Wednesday’s extended market session after announcing that the US Food and Drug Administration (FDA) issued Emergency Use Authorization (EUA) for its BinaxNOW COVID-19 rapid test for the detection of COVID-19 infection.
Abbott (ABT) said that the portable test, which has the size of a credit card, provides results in 15 minutes. The test, which will be sold for $5, demonstrated sensitivity of 97.1% and specificity of 98.5% in a clinical study. The company plans to ship tens of millions of tests in September, ramping up to 50 million tests a month at the beginning of October.
Abbott said that the BinaxNOW test uses its lateral flow technology, making it a reliable and familiar format for frequent mass testing. With no equipment required, the device will be an important tool to manage risk by identifying infectious people so they don’t spread the disease to others, the company said.
In addition, Abbott will launch a complementary mobile app for iPhone and Android devices named NAVICA. This free first-of-its-kind app, will allow people who test negative to display a temporary digital health pass that is renewed each time a person is tested through their healthcare provider together with the date of the test result. Organizations will be able to view and verify the information on a mobile device to facilitate entry into facilities along with hand-washing, social distancing, enhanced cleaning and mask-wearing.
“We intentionally designed the BinaxNOW test and NAVICA app so we could offer a comprehensive testing solution to help Americans feel more confident about their health and lives,” said Abbott CEO Robert B. Ford. “BinaxNOW and the NAVICA app give us an affordable, easy-to-use, scalable test, and a complementary digital health tool to help us have a bit more normalcy in our daily lives.”
To date, Abbott has provided more than 27 million COVID-19 tests in the US, including 14 million detection tests and 13 million antibody tests.
BTIG analyst Marie Thibault said that although Abbott did not provide revenue guidance last month, management nodded at mid-single-digit revenue growth for 2020, with the ability to possibly go higher.
“Factors that could drive 2H outperformance include new product launches, fast recovery in the base business, and demand for COVID-related testing. We believe our forecast remains conservative,” said Thibault. “Even with a vaccine in place, COVID testing may take its place alongside flu testing and continue to be routinely used to some degree for the foreseeable future.”
That being said, Thibault reiterated a Hold rating on the stock, adding that “shares trade at a midteens premium to their comp group and we feel the shares’ relative valuation appropriately reflects risk vs. reward”. (See Abbott stock analysis on TipRanks)
The rest of the Street is cautiously optimistic on the stock. The Moderate Buy analyst consensus breaks down into 8 Buys versus 2 Holds and 1 Sell. With shares up 19% this year, the $108 average price target now implies a more modest 4.7% upside potential over the coming year.
Related News:
Moderna Pops 6% On Covid-19 Vaccine Response In Older Adults; Analyst Says Buy Now
AstraZeneca Rises On Report Trump Could Fast-Track Covid-19 Vaccine Candidate
Merck Wins 2 Approvals For Keytruda Therapy In Japan
