Citi maintains Buy rating on Quidel stock amid strategic pivot

On Wednesday, Citi analysts maintained their Buy rating on Quidel Corp . (NASDAQ:QDEL) stock with a price target of $50.00, representing a 65% upside from the current price of $30.29. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate. This decision follows Quidel’s announcement to discontinue its Savanna platform, largely due to recent RSV clinical trial results and the need for further investments.

Quidel now plans to acquire LEX Diagnostics, pending FDA approval of its molecular asset expected by late 2025 or early 2026. LEX Diagnostics offers PCR respiratory capabilities for Flu A/B and COVID-19, providing rapid results in 6-10 minutes at the point of care. The platform is scheduled to launch in early 2026 and is projected to contribute to annualized growth as it scales in the latter half of 2026.

The company has reiterated its financial guidance for the fiscal year 2025, forecasting revenue between $2.60 billion and $2.81 billion and adjusted EBITDA of $575 million to $615 million, building upon its current LTM revenue of $2.76 billion and EBITDA of $560.7 million. The discontinuation of the Savanna platform is anticipated to result in annualized savings of $25 million, with $11 million expected in the second half of 2025. For deeper insights into Quidel’s financial health and growth prospects, InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis.

Management has also reaffirmed its target of achieving mid to high 20% adjusted EBITDA margins by 2027, while maintaining a current gross profit margin of 47%. Citi analysts view the shift from Savanna to LEX Diagnostics as a positive strategic move, highlighting the cleaner business setup.

In other recent news, QuidelOrtho reported a strong financial performance for the first quarter of 2025, with adjusted earnings per share (EPS) of $0.74, surpassing the forecasted $0.61. The company’s revenue reached $693 million, slightly below the forecast of $694.43 million. QuidelOrtho also announced a strategic shift in its molecular diagnostics approach by planning to acquire LEX Diagnostics, pending FDA clearance, while discontinuing its Savanna platform. Jefferies analyst Tycho Peterson upgraded QuidelOrtho’s stock rating from Hold to Buy, setting a price target of $44.00, citing improvements in the company’s financial performance and strategic initiatives. The analyst noted a significant year-over-year EBITDA margin improvement of 450 basis points. QuidelOrtho has reaffirmed its full-year 2025 financial guidance, projecting total revenue between $2.6 billion and $2.81 billion, with adjusted EPS expected to range from $2.07 to $2.57. The company is also targeting significant cost savings and operational efficiencies. CEO Brian Blaser expressed satisfaction with the quarterly results and emphasized the company’s focus on execution and cost-saving initiatives.

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