Is GenMark Diagnostics Underappreciated in the COVID-19 Fight?

GenMark Diagnostics Inc. (NASDAQ: GNMK) may not be a household name, and most investors are not aware of it, with its market cap of just under $300 million. Yet, GenMark became more widely known last week after the U.S. Food and Drug Administration (FDA) granted Emergency Use Authorization for COVID-19 testing. The shares rose from $4.00 to $6.00 before settling lower last week with a $5.36 close on Friday.

Canaccord Genuity has a Buy rating and a $9 price target. The call has done little to nothing for the shares so far on Monday, and the stock has really not made any of the zany exponential gains that have been seen in other coronavirus-related stocks.

What the firm likes about GenMark is that its test results for COVID-19 can be done in less than 2 hours, and the ePlax platform can process between 72 and 288 samples per day. The firm also believes that GenMark can address the needs of labs of all sizes, including large hospitals and large lab companies. The company is working to expand its manufacturing capacity above current levels of about 100,000 tests per month.

Canaccord Genuity’s diagnostics analyst, Max Masucci, said:

GenMark is now deeply ingrained in the COVID-19 test supply network after the company earned FDA Emergency Use Authorization for its SARS-CoV-2 test on Thursday night. We expect GenMark (and other small diagnostics companies) to play a key role in filling gaps in demand for screening tests. We expect GenMark’s share price to remain volatile, but we expect the company’s market positioning to strengthen once the outbreak subsides. We expect GenMark’s elevated visibility and emerging role in COVID-19 to encourage ePlex placements and “go-lives,” which may serve as a LT tailwind for consumables.

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While analysts had been taking targets down throughout 2019, GenMark was downgraded to Neutral at JPMorgan in December long before the coronavirus was out there. Raymond James also downgraded GenMark to Market Perform back on February 11, and that was still before the U.S. stock market became coronavirus-crazed.

GenMark Diagnostics traded down 10% at $4.83 late Monday morning. Its 52-week trading range is $3.36 to $8.17.

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