Send me real-time posts from this site at my email

Why Fulgent Genetics Stock Is Dropping Today

What happened

Shares of Fulgent Genetics (NASDAQ: FLGT), a genetics testing provider, were dropping sharply on Friday and were down by 13.9% as of 11:37 a.m. EST, after falling by as much as 17.3% earlier in the day. The company did not report any news that scared off investors, but a Wall Street analyst downgraded its stock, which explains its woes on the market today.

So what

The analyst, Credit Suisse's Erin Wilson Wright, downgraded Fulgent Genetics' stock to underperform from neutral. According to Wright, despite benefiting from COVID-related tailwinds (largely thanks to its coronavirus-testing solutions), the revenue spike the company experienced won't last forever.

The analyst also gave Fulgent a new price target of $40, slightly down from her previous target of $42. Shares of the genetics testing specialist currently go for roughly $61, which means Wright's price target represents a significant downside, and that's after it has already dropped by double digits today.

Image source: Getty Images.

Now what

Wall Street analysts' opinions are just one data point investors should consider before deciding whether to buy or sell shares of a company. And for what it's worth, there is another side to Wright's argument. First, note that Fulgent Genetics thinks it will generate $300 million in revenue for its fiscal year 2020, representing more than 800% year-over-year growth.

The coronavirus testing market will also keep growing at a decent pace in the coming months and years. This segment is highly competitive, but the healthcare company has successfully captured enough of this market to affect its top line significantly.

What's more, even after jumping by 303.9% last year, the stock is trading at a reasonable 11.3 times forward earnings, compared to a forward P/E of 24.19 for the S&P 500. These factors and others make Fulgent Genetics at least worth considering, in my view.

10 stocks we like better than Fulgent Genetics, Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Fulgent Genetics, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 20, 2020

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fulgent Genetics, Inc. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue