Companies ranging from vaccine makers Moderna and Pfizer to treatment developers Gilead Sciences and Regeneron have seen their stocks take a wild ride this year as the world searches for weapons against COVID-19. But there’s another, less risky approach to investing in the war against the coronavirus pandemic—focus on life-sciences companies that make testing kits and equipment.
Some of these companies are running millions of tests each week to identify people who currently have COVID-19 or who were previously exposed to the virus that causes the disease and have developed antibodies. Widescale testing is among the keys to monitoring the spread of the disease and controlling the outbreak.
At the same time, some companies have seen a surge in the use of home monitoring tests for a variety of other illnesses such as diabetes as patients avoid doctors’ offices and hospitals.
Three attractive stocks…
Danaher Corp. (DHR), one of the first companies to receive FDA authorization for a nasal swab test to detect a current COVID-19 infection, expects to conduct more than six million tests per quarter. The company also is developing an antibody test and a test that can detect a COVID-19 infection and/or a regular flu infection at the same time.
Hologic (HOLX) is a leader in molecular diagnostics and imaging equipment. Amid the coronavirus outbreak, it quickly developed a new test and is on track to analyze more than a million tests for COVID-19 each week using its 1,800 diagnostic units worldwide.
DexCom (DXCM) makes glucose-monitoring devices, targeting the more than 30 million diabetic patients in the US. The devices wirelessly transmit reports to doctors and other caregivers. Revenue jumped 44% to $405 million in the first quarter of 2020, and further adoption of its technologies is expected to continue as people shift to telemedicine.
Source: Brandon Couillard and Raj Denhoy, analysts specializing in life-sciences stocks for Jefferies, New York City. Jefferies.com