The omicron variant of Covid-19 is expanding at breakneck speeds. With data on infections soaring around the world, companies that produce antigen tests for the detection of the disease are going to close the year at all-time highs, after having noted strong revaluations. Groups like Abott Laboratories, Siemens Healthineers or Roche accumulate in 2021 returns that are around or exceed 30%, and that add to an already exceptional 2020.
An old economic adage says that “where there’s a queue, there’s a business.” This is demonstrated by the long lines of people waiting at the doors of pharmacies, laboratories, hospitals and primary care centers to get a test to see if they have the coronavirus or a simple cold.
The Christmas gatherings have triggered the demand for antigen testing. Many want to be reunited with their loved ones with a certain sense of security after having a negative test result. Several autonomous communities, such as Madrid, have offered a free test to the entire population. But the avalanche of requests has been such that many companies have run out of stocks.
Siemens Healthineers (a cutting of the large German group) recently explained in a meeting with investors that since 2020 they have commercialized more than 300 million tests to detect Covid-19.
Other test producers
- Qiagen. It is a German company specializing in diagnostics, listed on both the Frankfurt Stock Exchange and the New York Stock Exchange. The firm is trading at $ 55 per share, also very close to its all-time highs. Its product for the detection of Covid-19 has more and more weight in sales. The group has a wide international diversification.
- Quest Diagnostic. The US companies reached their all-time high last week, coinciding with the strong rise in demand for antigen testing, both for Thanksgiving and the Christmas holidays. Through 2021, Quest stocks have risen 38%.
- LabCorp. It is another of the US firms that have appreciated the most thanks to its offer of coronavirus detection tests. During the year that now ends they have risen almost 50%. Its product has been one of the most demanded, along with Abbott, Quidel, Quest and Hologic.
In the third quarter results, the company confirmed that it is doubling the sales data of its Clinitest product, the rapid antigen test that is sold the most in pharmacy. Its global turnover has grown at a rate of 40%, to exceed 5,000 million euros in the first nine months of the year. In the last month, it has risen in the stock market by about 4% and since the beginning of the pandemic it has appreciated by 44%.
Siemens Healtineers is a world leader in diagnostic imaging, both for coronary and cancer diseases, but revenue from testing.
The Barclays Stock Market analysis team was one of the companies that recommended to invest in 2022. “It has a high valuation, but also a high reliability on its future income and a growth profile,” they pointed out in a report.
The power of the greats
Although there are dozens of companies that manufacture antigen tests, only large groups are capable of closing large contracts with public administrations that want to distribute this test among the population, officials or certain groups.
In the case of Roche, the Swiss pharmaceutical giant, in its latest results pointed out that the growth in sales of tests for the detection of Covid-19 had shot up by 39% in the first nine months of the year, before the omicron variant spread like wildfire. “Our leadership in coronavirus testing is contributing very positively to the performance of the diagnostics division,” the group said in a statement.
The American Abbott, even more specialized in diagnostic tests, sold tests worth 1.9 billion dollars (1.68 billion euros) in the third quarter of the year.
Of the 24 analysis firms that follow the evolution of the value and make their valuation public, 70% recommend buying the company’s shares. During the last month its shares have appreciated more than 10%.
Analysts believe that it will rise even more thanks to its strong market position that is allowing it to raise prices and thus face the increased cost of supplies due to bottlenecks in international transport.
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