Citi cuts OraSure stock price target to $6, maintains buy rating

Published 26/02/2025, 11:42
Citi cuts OraSure stock price target to $6, maintains buy rating

On Wednesday, Citi analyst Patrick Donnelly adjusted the financial outlook for OraSure Technologies, reducing the price target to $6 from the previous $9 while maintaining a Buy rating on the company’s shares. According to InvestingPro analysis, OraSure is currently trading below its Fair Value, with a "GREAT" overall financial health score. The revision follows OraSure’s recent earnings report, which showed revenues aligning with guidance and slightly surpassing the consensus estimate.

OraSure Technologies, listed on (NASDAQ:OSUR), reported quarterly revenue of $37.4 million, which met the company’s forecast of $36-38 million and was marginally higher than the consensus figure of $36.8 million. The core business contributed $36.5 million to this total, fitting within the projected range of $35-37 million, with approximately $1 million coming from COVID-19 related revenue, as anticipated. The demand for OraSure’s products during the quarter was buoyed by strong sales in HIV, HCV, and Syphilis testing.

The company’s gross margin for the fourth quarter was reported at 40.1%, which fell short of the consensus expectation of 43.4%. While this represents a decline from previous quarters, InvestingPro data shows the company maintains a healthy trailing twelve-month gross margin of 48.81%. The decline in gross margin was attributed to reduced COVID-19 testing revenue and a shift in international sales mix. Looking ahead, OraSure’s management has provided guidance for the first quarter of 2025, with projected revenues ranging from $27.5 to $31.5 million. The core business is expected to generate between $27 and $31 million, with around $0.5 million from COVID-19 related revenue.

The lower-than-expected revenue guidance for the upcoming quarter is a reflection of uncertainties surrounding U.S. funding, both domestic and international. Customers are reportedly scaling back their activities as they await further clarity on funding issues. In response to the recent earnings report and forward guidance, Citi has updated its financial model for OraSure, reaffirming the Buy/High-Risk rating but lowering the price target to account for the anticipated decrease in revenue figures. For deeper insights into OraSure’s financial health and growth prospects, including 8 additional ProTips and comprehensive valuation metrics, check out the detailed Pro Research Report available on InvestingPro.

In other recent news, OraSure Technologies Inc. reported its fourth-quarter 2024 earnings, with revenue surpassing expectations at $37.45 million, exceeding forecasts by approximately $730,000. Despite this revenue beat, the company’s stock fell nearly 10% in aftermarket trading, reflecting investor concerns over future profitability. The company ended the quarter with a robust cash position of $268 million and aims to achieve a 50% gross margin through operational efficiencies. OraSure’s strategic acquisition of Sherlock Biosciences is expected to expand its innovation pipeline, with new product developments in molecular diagnostics. Analysts from firms such as Stephens and JPMorgan have shown interest in the company’s international business and potential impacts from funding changes in government-supported markets. The company is also closely monitoring external factors, such as uncertainties in HIV testing programs and academic research funding, which could impact future revenue. Despite these challenges, OraSure remains focused on its strategic transformation and long-term growth prospects.

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