Maxim upgrades Co-Diagnostics rating to 'Buy' as demand grows for its coronavirus diagnostic test.

Maxim Group has upgraded its rating on Co-Diagnostics Inc (NASDAQ:CODX) to 'Buy' from 'Hold' as demand grows for the firm's coronavirus (COVD-19) diagnostic test. In addition, analysts at Maxim raised their revenue forecast for the group and set $30 price target, saying Co-Diagnostic’s Logix Smart COVID-19 test kits have been “transformative for the company.” The Salt Lake, Utah-based company closed its first quarter on March 31, 2020, with $1.5 million in revenue thanks to surging global demand for the test kits. Gross margins hit 71.5% on sales of the test. However, it saw a net loss of $1.1. million. READ: Co-Diagnostics increases production of coronavirus diagnostic test on robust demand Co-Diagnostics, which reported the results on May 15, noted then that it is seeing COVID-19 test and equipment sales of over $18 million in the year-to-date, with $16.5 million so far in 2Q as it gets test orders from public and private organizations in nearly 50 countries and over 15 US states. The company has manufactured more than six million COVID-19 tests to date and has ordered components for more than 20 million additional tests that look for polymerase chain reaction (PCR), a process that causes a very small well-defined segment of DNA to be amplified. The test can produce results in less than 2 hours. Looking ahead, Maxim analyst Jason McCarthy said “we are now factoring in COVID-19 testing for both pandemic-scale testing and symptomatic/’new normal’ testing” this year and beyond.  McCarthy noted that Co-Diagnostic’s test “is rapidly emerging as a go-to PCR kit and not just in the US,” noting that it “meets expectations on performance, pricing and throughput, and we expect significant revenue growth for COVID-19 testing, as well as for the company’s already marketed infectious disease tests." In March, Maxim had downgraded its rating for the stock to 'Hold', stemming from what its analysts saw as a potential best-case scenario for COVID-19 tests being priced into the shares and before the pandemic spread across the US and the world. “That said, the past few months have essentially transformed the company, with $18 million in revenue YTD, in what we forecast to be over $100 million in revenue in 2020,” McCarthy pointed out in the broker's latest upgrade research. “And note that CDI is already profitable, just from April/May sales. Looking ahead, COVID-19 testing is likely going to be with us for a while, creating a long-term, high margin revenue opportunity for CDI,” he added. Co-Diagnostics' stock, which has been one of the hottest on Wall Street during the last two months, recently rose 1.4% to $18.85 a share in pre-market trading. Contact the author: patrick@proactiveinvestors.com Follow him on Twitter @PatrickMGraham