Does Quidel Have More Life Left In It? (QDEL)

| About: Quidel Corporation (QDEL)

Earlier this week I responded to a reader's comment regarding Quidel (ticker: QDEL) and its prospects as an avian flu play. For those of you unfamiliar with the story, Quidel manufactures and sells rapid, point-of-care clinical diagnostic kits. The stock’s primary value driver is its test for influenza, which has also been shown to be affective in detecting avian influenza. Aside from what I believe to be an overvalued stock due to the avian flu hype, the historical performance going into flu season suggests the stock may have more room to run.

To understand how Quidel’s stock is affected by the flu season, I looked at the historical stock price movements between 1999 (Quidel launched its influenza test ahead of the 1999/00 flu season) through today’s close. Specifically, I tabulated the closing stock performance from the end of March in each year to the closing peak stock price to quantify how the stock behaved between flu seasons, and I evaluated how the stock performed from the close on October 25th in each year to the closing peak stock price. The table below summarizes the results.

The most striking result is that Quidel’s stock price has appreciated between Oct. 25th and the peak price, which on average occurred 67 days later, every year for the past 6 years. In fact, the median appreciation over this two-month period is 47% (average 68%).

A sell off trend is also apparent – on average investors sell the stock at the height of flu season. In fact, between the closing peak stock price and following Mar. 31st closing stock price, which on average equated to 91 days, Quidel’s stock fell about 40% on average every year in the previous six years.

Extrapolating these trends implies Quidel could appreciate 47% to a stock price of $16.27 on December 30, 2005, and could subsequently sell off 40% to a stock price of $9.84 on March 31, 2006. I am not making any predictions, just relaying what the data say. Make of it what you will.

QDEL chart.

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