Analyst Is Frustrated By QuidelOrtho's Reduction In Guidance - Here's Why

Raymond James analyst Andrew Cooper reiterates Strong Buy on QuidelOrtho Corporation QDEL, lowering the price target to $110 from $130.

The company recently reported Q2 results, where earnings beat estimates.

The performance in the quarter has been admittedly mixed (8% top-line beat but 2% adjusted EBITDA miss), notes the analyst, mainly focusing on the "frustrating reduction" to guidance (namely on EBITDA and EPS).

With the overall revenue lower bound unchanged, the analyst is precisely downbeat on the new EBITDA midpoint ($815 million), matching the prior low end (while the EPS midpoint is even lower vs. the prior range).

The inability to set a base has been a significant impediment for investors, and another margin reduction exacerbates that challenge, the analyst adds.

Based on the above, the analyst lowered the FY23 revenue estimate to $2.94 billion from $3.00 billion.

For FY24, the analyst lowered revenue estimates to $2.94 billion from $2.97 billion. For FY25, the analyst declined revenue forecasts to $3.11 billion from $3.16 billion.

However, the core business at least performed well on the top line, notes the analyst.

In fact, with China recovering nicely (+26% CC ex-respiratory) and the backlog working lower, the analyst sees clear signs that Labs is durably better positioned. 

The backlog work down is a margin drag (referenced below) but should create a strong base for growth in 2024 as new instruments add to the overall consumable pull through, adds the analyst.

Price Action: QDEL shares are trading lower by 1.96% to $74.84 on the last check Tuesday.