CEMI stock: Is it worth buying Chembio Diagnostics?

Chembio Diagnostics Inc. (NASDAQ:CEMI) skyrocketed by nearly 160 per cent on Wednesday, July 22. The massive jump came after the company announced receiving US$ 28.3-million order from Brazil’s Bio-Manguinhos to purchase its COVID tests.

The company received regulatory approval for its DPP SARS-CoV-2 Antigen test system from Brazilian Public Health System. It will develop and produce covid vaccines and cater to the biopharmaceuticals and diagnostics needs to combat the pandemic outbreak.

CEMI stock performance and financials

The US$ 108.38-million diagnostics company mostly deals with diagnosing and detecting respiratory and sexually transmitted diseases. The company sells its products both directly and through its distribution channels.

The stock closed at C$ 5.34 as on Wednesday and is trading nearly 39 per cent down from its 52-week high of US$ 8.75 (January 26, 2021). It is trading nearly 159 per cent up from its 52-week low of US$ 2.06 (July 20, 2021).

Following its massive surge, the healthcare scrip spiked 84 per cent up within one month and jumped 122 per cent on a week-to-date (WTD) basis. The stock price, however, jumped up by only 12 per cent on a year-to-date (YTD) basis.

The company posted revenue of US$ 8.7 million in Q1 FY2021 increased, up 27 per cent year-over-year. This increase came on the back of 311 per cent increase in revenue coming from government grants, R&D revenue and license and royalty, totalling US$ 4.7 million as revenue in this quarter.

On the valuation metrics, the company has a price-to-book (P/B) ratio of 4.64 time and debt-to-Equity (D/E) ratio of 1.09 times.

Out of the total revenue as of FY2020, Latin America contributed 39.74 per cent, Europe and the Middle East contributed 21 per cent and Africa contributed nearly 20 per cent.

Should you buy CEMI stock?

The huge order from Brazil for Chembio Diagnostics’ covid tests to combat the pandemic outbreak is encouraging.

The company has also received purchase orders for shipment of SURE CHECK HIV self-test as part of World Health Organisation directives to countries like Africa and South East Asia. This test uses small blood samples and provides results within 15 minutes

As per the management, it achieved revenue of US$ 3.4 million in its latest quarter due to the Biomedical Advanced Research and Development Authority (BARDA) award for issuance and development of DPP SARS-CoV-2 Antigen test system.

The firm also claims to have advanced strategies in place to leverage and build the distribution network's capabilities.

Over 4 million CEMI scrips exchanged hands on Wednesday, indicating a favourable investing sentiment. However, it could just be short-term metric.

Investors must evaluate the company financials and stock fundamentals before taking a decision.



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