William Blair downgrades QuidelOrtho with shares in ‘penalty box’

William Blair downgraded QuidelOrtho to Market Perform from Outperform without a price target. The company’s Q4 results and 2024 guidance both materially missed expectations for adjusted EBITDA and earnings, the analyst tells investors in a research note. The firm says the “profitability disconnect” in the guidance was mainly the result of lower respiratory revenue than expected, with management using the start of the year as an opportunity to take a more prudent approach to guiding these high-margin sales, “something that is likely better for long-term confidence in modeling, but a tough pill to take in the short term.” Blair thinks the shares will likely to remain range-bound until management can show progress on its execution, rebuild some credibility on the margin front, and show that there is a path back to the high-20% adjusted EBITDA margin range. It says the shares are “likely in the penalty box for at least the first part of 2024.”