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GenMark Diagnostics Surges 7% on Preliminary 4Q Results

Shares of GenMark Diagnostics rose 6.6% in Tuesday’s pre-market trading as the company announced an 84% year-over-year jump in its preliminary fourth-quarter revenue to about $50 million.

The company said that it anticipates 2020 revenue of $171 million, reflecting 95% growth. Notably, GenMark (GNMK) estimates ePlex platform revenue will rise 138% to $45 million in 4Q and 155% to $152 million in 2020.

The company enhanced its manufacturing capacity by over 75% year-over-year with the completion of the first of its two new production lines in 4Q 2020. It ended 2020 with an installed base of 792 ePlex analyzers placed globally, reflecting a 50% gain.

CEO Scott Mendel stated, “Fourth quarter demand remained very strong, driven by our ePlex RP2 and blood culture ID panels that provide broad pathogen coverage and simplified workflow with hands on time of one minute or less.”

“With multi-year contracts that include committed volumes, GenMark has created an enduring and recurring revenue stream that provides visibility to driving continued top line growth in 2021,” added Mendel. (See GNMK stock analysis on TipRanks)

Meanwhile, the company calls for 4Q gross margin of about 39% and full-year gross margin of 39%-40%. It anticipates announcing full-year results and 2021 guidance in late February.

In reaction to the update, Needham analyst Michael Matson reiterated a Buy rating on GenMark with a price target of $22. The analyst believes that the company’s Respiratory Pathogen Panel (RP2) panel, which tests for over 20 viruses including COVID-19, gained from pandemic-led demand in 4Q.

Matson feels that the company would continue to benefit from elevated testing volumes due to a resurgence in COVID-19 cases and a slower-than-expected vaccine rollout.

Additionally, the analyst believes that increased ePlex manufacturing capacity should allow ePlex revenue to increase sequentially in 1Q21. Despite the strong ePlex placements and continued COVID-19 tailwind, the analyst thinks that top-line growth could slow this year given very tough comparables.

However, over the longer-term, Matson expects the ePlex systems placed during the pandemic to drive testing volumes across GenMark’s broader testing offerings.

Overall, the Street’s Moderate Buy analyst consensus on GenMark is based on 2 Buys and 1 Hold. Shares have risen a whopping 205% over the past year and the average price target of $22 indicates further upside potential of 42.1% from current levels.  

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