3 COVID actions that could double in 2022


The market is a forward-looking mechanism, and some people might think the COVID-19 pandemic is “over.” This is probably an exaggeration. While vaccinations will hopefully reduce the danger, the virus will continue to mutate and healthcare companies will continue to fight it. Learn more to see why three Fool.com contributors believe COVID actions Lightning Genetics (NASDAQ: FLGT), NRx Pharmaceuticals (NASDAQ: NRXP), and Adaptive biotechnologies (NASDAQ: ADPT) could double your money this year.

Test. Test. Will this stock light up?

Patrick Bafuma (Fulgent Genetics): As you entered the last wave of 2021, you may have heard that there has been a series of COVID tests. In fact, this week again, the local CVS told me there was no over the counter test available within a 20 mile radius. Yet many countries, ports and employers want the results of a PCR test within three days of entry. While this can put a strain on resources, this is great news for RT-PCR test maker Fulgent Genetics.

Image source: Getty Images.

This medical diagnostics company has focused on contracting with school systems, nursing homes, sports organizations, health clinics, and the government to commercialize highly specific PCR tests for the SARS-CoV virus. 2. After recording $ 95.5 million in revenue in the third quarter, it’s likely that this will continue with the omicron variant for a good chunk of the New Year. The adjusted gross margin was also 81.3% in the third quarter of 2021. Over the past year, the margin has hovered between 77.1% and 82.6%, so apart from inflation issues I have there is little reason to believe that the margin will not remain enviable. And while it is clear that currently the future of the company remains tied to COVID-19, it is also clear that the virus refuses to go away. As such, I’m not convinced the COVID diagnostic numbers are going to melt for the company. And with short-term interest now at just under 13%, positive results for the company could take shareholders on a pleasant journey up and to the right.

With a price / earnings (P / E) ratio of just over 5, this stock looks incredibly cheap. Compared to traditional laboratory suppliers like Corporation of America Holdings Laboratory and Quest Diagnosis, with P / E ratios of 10.9 and 10.2 respectively, or Abbott Laboratories and his Binax test at a P / E of around 35, Fulgent seems markedly undervalued. With a P / E in the middle of the numbers and what seems like an endless need for their product, Fulgent Genetics could be an easy double in 2022.

A healthy rebound could take shape

Georges budwell (NRx Pharmaceuticals): NRx Pharmaceuticals stock lost 80.4% of its value in 2021. Although the drugmaker’s stock initially erupted in the first months of 2021, Wall Street’s enthusiasm for this speculative coronavirus stock ‘is gradually weakened as the year progressed thanks to the US Food and Drug Administration (FDA) refusing to grant Emergency Use Clearance (EUA) for the severe COVID-19 treatment of the company, Zyesami (aviptadil). In summary, Zyesami would likely have racked up several hundred million dollars in sales with an EUA for severe cases of COVID-19. This is a tremendous business opportunity for a company with a market cap of less than $ 300 million at the time of writing.

The good news is that NRx Pharmaceuticals recently filed a new Revolutionary Therapy Designation (BTD) application for Zyesami with the FDA. This revised BTD application focuses on COVID-19 respiratory failure in patients who progress despite treatment with remdesivir and other approved therapies. If granted, this regulatory designation could open the door to EUA in this patient population. While this revised target market is certainly smaller in scope, it would still be a healthy business opportunity for a company of the current size of NRx Pharmaceuticals. In fact, NRx Pharmaceuticals should be able to cash at least $ 100 million in sales this year if the FDA gives the green light this time around.

The big picture is that this battered coronavirus stock could be gearing up for a higher monstrous run in 2022.

Adaptive biotechnologies will rebound

Taylor Carmichael (Adaptive biotechnologies): Adaptive Biotechnologies focuses on the immune system. The company maps 30 billion immune receptors in the human body and uses supercomputers to Microsoft to run the data as it maps our adaptive immune system. Later that decade, Adaptive says there may have a universal blood test on the market: A doctor will take a blood sample and can “hack” your immune system and see what diseases it fights. This blood test could reveal if you have infectious diseases, autoimmune disorders, or cancer.

In the meantime, Adaptive already has several diagnostic tests on the market. The FDA has cleared three of the company’s clonoSEQ tests for minimal residual disease in blood cancers (multiple myeloma, acute lymphoblastic leukemia, and chronic lymphoid leukemia). And the company has an EUA for its COVID-19 test.

Adaptive’s COVID test is the first on the market that uses T cells in the blood to check for disease. Most recently, the Molecular Diagnostic Services Program agreed to pay $ 770 per test for certain groups of people, including immunocompromised patients.

Adaptive is not yet profitable and its revenues are still meager: 146 million dollars over the last 12 months. The stock is down 50% as impatient investors head for exits. But this is a mistake. The company estimates that there are 7 million immunocompromised patients in the United States alone. It’s a short-term, $ 5 billion market opportunity. With the government paying for the tests, we are expected to see an increase in Adaptive’s COVID-related revenue in 2022, and the stock is expected to follow.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


About Author

Comments are closed.