On Wednesday, Citi adjusted its outlook on Quidel Corp (NASDAQ:QDEL), reducing the price target from $72.00 to $50.00 while keeping a Neutral rating on the stock. The revision follows Quidel's fourth-quarter earnings report, which revealed a revenue of $743 million, aligning with the company's guidance but falling short of the $797 million market consensus. The adjusted EBITDA margin of 26.3% was notably below the expected mid-30% range, and the adjusted earnings per share (EPS) of $1.17 significantly missed the consensus estimate of $2.04.
During the earnings call, the focus turned to the fiscal year 2024 guidance, especially regarding the margin profile and the anticipated revenue from endemic respiratory products. The company's projections for adjusted EBITDA margin (21-24%) and adjusted EPS ($2.40-$3.07) were well below the expectations of analysts, with a consensus previously set at $5.07. This shortfall in guidance is a continuation of concerns that were highlighted by the firm in a December downgrade.
Quidel's management addressed the overestimation of demand for endemic-respiratory products, leading to a more cautious approach for the FY24 guidance. The company now expects respiratory revenue to be in the range of $460-730 million. In response to the latest earnings and guidance, Citi has updated its model for Quidel, reflecting the Q4 2023 results and the revised expectations for FY24.
The downgrade in price target to $50 comes amidst a backdrop of Quidel's stock trading at an after-market price of $44.00. This new target suggests a potential upside of approximately 14% based on the after-market price at the time of the announcement. The firm's decision to maintain a neutral rating indicates a wait-and-see approach, taking into account the company's conservative stance on the upcoming fiscal year's performance.
InvestingPro Insights
In light of Citi's revised outlook on Quidel Corp, key metrics and insights from InvestingPro provide a deeper understanding of the company's financial health and future prospects. With a current market capitalization of $4.46 billion, Quidel's valuation reflects investor sentiment and market conditions. Despite recent challenges, the company's revenue remains substantial, with the last twelve months as of Q4 2023 reporting $2.997 billion, although this represents a decrease of 8.21% compared to the previous period.
InvestingPro Tips reveal that analysts are cautious about Quidel's earnings, with three analysts revising their earnings downwards for the upcoming period and expectations of a net income decline this year. Notably, the company was not profitable over the last twelve months, but there is a forecast for profitability within this fiscal year. For investors considering dividend income, it's important to note that Quidel does not pay a dividend to shareholders.
The adjusted price-to-earnings (P/E) ratio for the last twelve months stands at 54.57, which may factor into the valuation considerations of potential investors. Additionally, the price/book ratio as of the last twelve months is 0.89, suggesting that the stock may be undervalued relative to the company's book value.
For those interested in further insights, there are additional InvestingPro Tips available for Quidel Corp at https://www.investing.com/pro/QDEL. To enhance your investment research experience, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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