Reasons to Retain QuidelOrtho Stock in Your Portfolio for Now

QuidelOrtho Corporation QDEL is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by solid first-quarter 2025 results, is expected to contribute further. However, risks due to overdependence on the respiratory business and reimbursement policies persist.This Zacks Rank #3 (Hold) company has lost 27.3% in the year-to-date period against 8.3% growth of the industry. The S&P 500 has witnessed 0.7% growth in the said time frame.The renowned rapid diagnostic testing solutions provider has a market capitalization of $2.2 billion. QuidelOrtho’s earnings yield of 7.2% compares favorably with the industry’s 0.04%. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 74.5%.Image Source: Zacks Investment ResearchFactors Favoring QDEL’s GrowthPotential in Diagnostic Business: QuidelOrtho’s focus on the diagnostics business has been a wise move, given the strong growth potential in this market. A Mordor Intelligence report states that the clinical diagnostics market is valued at approximately $84.2 billion in 2024 and anticipated to go up to $109.2 billion by 2029, at a CAGR of 5.5%. QuidelOrtho has used its expertise and know-how to develop differentiated diagnostic testing technologies and products that generate specialized results.In each case, the company attempts to improve its performance in terms of ease of use, reduced cost, increased test accuracy and reduced time to result, thus attracting a growing range of customers and use cases.Robust Product Portfolio: QuidelOrtho offers diagnostic testing products to both healthcare professionals and individual consumers, with a portfolio that includes the Sofia and Sofia 2 analyzers, QuickVue, InflammaDry and AdenoPlus. Its Savanna instrument stands out in the Molecular Point-of-Care space and is expected to fuel revenue and margin growth following a strong U.S. launch. With FDA approvals already secured for the Savanna system and HSV panel, the company aims to initiate clinical trials for its respiratory panel in 2025, targeting the launch of both respiratory and STI panels within the same year.In April 2024, QuidelOrtho enhanced its Labs segment by adding the ARK Fentanyl II Assay to its U.S. Vitros XT, 5600 Integrated Systems and Vitros 4600 Chemistry System. This move addresses the growing need for opioid testing, particularly in hospital and emergency care settings. The new assay aligns with the company’s broader mission to deliver advanced diagnostics that respond to evolving public health challenges.Solid Q1 Results: QuidelOrtho ended the first quarter of 2025 with better-than-expected results. The company registered robust revenues from its Labs, Immunohematology and Molecular Diagnostics business units in EMEA and Other regions, which were encouraging. The expansion of margins bodes well. QDEL witnessed robust bottom-line growth as well.Per management, the growth of QDEL’s underlying business with its recurring revenue business model continued to perform well during the quarter. The company also made progress on implementing its cost-savings initiatives and is targeting additional cost savings across the business. Management expects that these initiatives will enable QuidelOrtho to operate more effectively and deliver incremental margin improvement in 2025 and beyond. This looks promising for the stock.Factors That May Offset the Gains for QDELThird-Party Reimbursement Policies: QuidelOrtho's Point-of-Care products are primarily used by physicians and other healthcare providers. In the United States, these providers, including hospitals and physicians, typically depend on third-party payers, such as private health insurance, Medicare and Medicaid, to reimburse all or part of the cost of diagnostic procedures. The success of QuidelOrtho's products could be impacted if healthcare providers do not receive sufficient reimbursement from third-party payers for the costs associated with its products.Overdependence on Respiratory Segment:  A significant risk for QuidelOrtho is its continued dependence on the respiratory segment, which historically has accounted for a substantial portion of total revenues. In 2024, respiratory revenues totaled $503.9 million, accounting for approximately 18% of the company's total annual revenues of $2.78 billion.While this represents a reduction from prior years, largely due to the expected normalization of COVID-19 testing demand, it underscores the pivotal role the respiratory portfolio—comprising COVID-19, influenza, RSV and strep tests—plays in the company’s overall financial health. Notably, respiratory revenues declined 29.5% year over year in 2024, caused by decreased COVID-19 testing volumes and a return to more typical, less volatile flu seasons.Estimate TrendQuidelOrtho is witnessing a positive estimate revision trend for 2025. In the past 30 days, the Zacks Consensus Estimate for its earnings has moved north by 7 cents to $2.34 per share.The Zacks Consensus Estimate for the company’s second-quarter 2025 revenues is pegged at $611.3 million, indicating a 4% decline from the year-ago quarter’s reported number.Key PicksSome better-ranked stocks in the broader medical space that have announced quarterly results are CVS Health Corporation CVS, Integer Holdings Corporation ITGR and AngioDynamics ANGO.CVS Health, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2025 adjusted earnings per share (EPS) of $2.25, beating the Zacks Consensus Estimate by 31.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Revenues of $94.59 billion outpaced the consensus mark by 1.8%. CVS Health has a long-term estimated growth rate of 11.4%. Its earnings surpassed estimates in each of the trailing four quarters, with an average surprise of 18.1%.Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.AngioDynamics, currently sporting a Zacks Rank #1, reported a third-quarter fiscal 2025 adjusted EPS of 3 cents against the Zacks Consensus Estimate of a 13-cent loss. Revenues of $72 million beat the Zacks Consensus Estimate by 2%.ANGO has an estimated fiscal 2026 earnings growth rate of 27.8% compared with the S&P 500 composite’s 10.5% growth. AngioDynamics’ earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 70.9%.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AngioDynamics, Inc. (ANGO): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis Report QuidelOrtho Corporation (QDEL): Free Stock Analysis Report Integer Holdings Corporation (ITGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks