Quidel Corp. (NASDAQ: QDEL) is considered a bet on flu season. The analyst team over at Canaccord Genuity likes Quidel quite a bit. The firm is maintaining its Buy rating and $25.00 price target.

Canaccord Genuity analyst Mark Massaro sees Quidel as being a small company with big ambitions. There could be revenue growth of 10% to 15% annually, despite a competitive environment.

One wild card for drug companies that are treating flu and other respiratory infections during flu and cold season is that most of the states and areas in the United States are experiencing a record high temperature this winter. That can work both ways in winter. After all, temperature swings of 30 and 40 degrees from night to day can create problems.

Mark Massaro’s report said:

We recently hosted investor meetings with management, who signaled confidence around its expectations to execute commercially and launch new test menu from its internal development initiatives. We remind investors that now is seasonally the time of year to buy shares of Quidel, now about 2 weeks away from a typical sharp uptick in influenza. We reiterate our Buy rating and $25 price target.

The competitive environment can be an issue. Roche, Alere, and Cepheid are getting plenty of attention, but Canaccord Genuity expects Quidel to remain a leader in the point-of-care infectious disease space. Quidel itself also believes that they are very well positioned should reimbursement in molecular testing materially decline.

Quidel has also signaled a comfort level in hitting 10% to 15% annual revenue growth. The company has aspirations of reaching $500 million or more in revenues by 2020, which would imply closer to 20% revenue growth each year. The company also sees reaching more than 70% gross margins by 2020, up from about 65% today.

Canaccord Genuity also sees additional reaching out made by Quidel as a possibility. The firm’s report said:

Quidel is one of three companies in our universe (along with Meridian Bioscience and Orasure) with a stash of cash ($180+ million in cash plus $140 million in borrowing capacity) that we think may be deployed in 2016. Quidel stated they could do a deal in the $200 million to $300 million range and is mostly interested in expanding in infectious disease and molecular diagnostics.

A last thing is Quidel’s pipeline. Canaccord Genuity’s report talked up the new Solana molecular platform, HSV 1 and 2, flu, C. difficile infection, MRSA, Lyme disease and more.

Quidel was last seen down 2.6% at $21.22, with a consensus analyst price target of $24.17. Its 52-week range is $17.16 to $29.38. Quidel’s short interest was last seen at 4.7 million shares, and while that is over 40 days to cover, it is way down from the peak above 6.7 million shares short seen this summer.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.