Quidel Corp (QDEL)

QDEL (Quidel Corp)
This company makes rapid diagnostic test for illnesses such as the flu. If this H1N1 swine flu continues to be a nasty problem, this is probably a company that will continue to have great results. Just last quarter alone, they grew revenues by a whopping 76% and earnings by a full 215% Paying 23 times trailing and 22 times forward earnings may seem like a high multiple, but in case this company continues to have such growth rates for any length of time, then that will prove to be quite a bargain anyways. Additionally, the average of the eight analyst estimates has increased by almost 14% over the past 90 days. I see no reason that these upward revisions would not continue as it is becoming more apparent the swine flu has become more and more of a worry.

Directly from their conference call on October 19th, management said this: "We had a very significant benefit during the quarter from our influenza test sales driven by a considerable increase in influenza like illness beginning in mid August", and "The emergence of the 2009 H1N1 virus, and an increase in a number of physicians using rapid flu tests to aid in the diagnosis of influenza, are the key contributing factors". Now, it's not as if these orders are going to just dry up because distributors and end users do not have a supply anywhere close to getting through this winter which is just starting. "With regard to influenza tests, we estimate that the majority of our domestic distributor inventories are at roughly three week supply of current end-user demand. We have also recently surveyed physicians, and based upon their feedback, believe their test on hand to be relatively low as well, with 75-percent of them expecting to reorder in the near term". Therefore we should probably expect QDEL to have a couple very nice quarters in a row.

One more little bright spot with this company, they have $65 million in cash (which has been growing year after year), and just $6 million in debt, therefore, I would assume a cash dividend or share buyback would be announced sometime within the foreseeable future.

RK

flu diagnostics. Good quarter....getting momentum