Since the beginning of the year, the biotech company Fulgent Genetics Inc. (FLGT) has risen almost 285 percent. The high interest in the shares of the company is due to the fact that it manufactures COVID-19 tests. Many countries are now planning, however, for the start of mass vaccination, which could first slow down and then avoid the pandemic altogether, a scenario which puts a question mark against Fulgent Genetics’ ability to sustain that recently gained traction.
Fulgent Genetics developed tests to diagnose a number of diseases, including cancer, prior to the COVID-19 pandemic. In reality, the company could set up tests at the request of customers to identify around 5,700 different genetic diseases. This ability provided good growth for Fulgent Genetics. The paying amount of research rose to 58,573 in 2019, which is 160 percent more year-on-year.
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The market for genetic testing fell significantly in 2020 as a result of the suspension of regular medical procedures. However, a test for COVID-19 was rapidly developed by Fulgent Genetics, and sales of this test were able to offset the fall in other segments. If Fulgent Genetics reported an increase in test volume by 75 percent year-on-year in the first quarter, before the spread of the pandemic, then in the second and third quarters-by 1003 percent and 4800 percent, respectively. The operating margin for the nine months ended September 30 was 62.5 percent. Given the good results of the previous quarters, the management of the company boosted its guidance for the full year not so long ago.
The end of the pandemic will slow Fulgent Genetics’ development, but it won’t stop it. In reality, when the main income was provided by genetic testing for different diseases, the business would simply return to the previous mode of activity. This is a fast-growing market (as shown by the 2019 statistics from Fulgent Genetics), and the business has a large range of research methods for a large variety of deviations.
On Tuesday, Fulgent Genetics Inc. (FLGT) stock was stable with +0.14% rise at $49.79.