QDEL Rallies 31.7% in Three Months: Can the Stock Keep Climbing Higher?

QDEL’s Core Businesses Show Resilient Growth

Second-quarter 2026 revenues rose 2.8% year over year to $630.9 million. Labs revenues increased 3.6%, Immunohematology grew 1.4% and Point of Care advanced 16.3%.

Excluding China, revenues grew 6% at constant currency. Labs revenues outside China rose 9%, while Immunohematology revenues outside China increased 5%, supporting management’s view that the core franchises remain comparatively resilient.

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QuidelOrtho’s Cost Actions Support Profitability

Adjusted EBITDA increased 21% year over year to $129 million in the second quarter, while adjusted EBITDA margin reached 20.5%. Operating expenses as a percentage of revenues also improved 40 basis points.

The Optimization Plan continues to target facility consolidation, procurement savings and distribution rationalization. QuidelOrtho still expects roughly $50 million of net cost savings through 2027, which could help support profitability while revenue growth remains uneven.

QDEL Faces a Sharp China Slowdown

China revenues fell 18.7% on a reported basis and 23.3% at constant currency in the second quarter. Slower distributor purchases ahead of national in-vitro diagnostics pricing changes were a key drag on the region.

Management observed customers reducing inventories faster than expected after quarter-end and expects China challenges to persist through the remainder of 2026. The timing and implementation of the revised pricing guidelines remain uncertain, limiting near-term demand visibility.

QuidelOrtho’s Lower Outlook Tests the Rally

QuidelOrtho cut its 2026 revenue guidance to $2.52-$2.60 billion from $2.70-$2.75 billion. Adjusted EBITDA guidance dropped to $540-$560 million from $615-$630 million, while adjusted earnings guidance fell to 65-90 cents per share from $1.80-$2.00.

The company also adopted more conservative assumptions for the 2026-2027 respiratory season after lower U.S. positivity rates and softer Southern Hemisphere indicators. That approach reduces expectations for a seasonal rebound and keeps near-term earnings visibility constrained.

QDEL’s Financial Risks Could Limit Further Upside

Adjusted gross margin contracted 130 basis points to 44.4% in the second quarter. QuidelOrtho ended the period with $123.4 million in cash against $2.89 billion of total debt, while cumulative operating cash use reached $143.6 million.

Competition also remains substantial. Abbott Laboratories ABT reported $3.1 billion in second-quarter Diagnostics sales, while Danaher Corporation DHR completed its Masimo acquisition in June, adding specialty diagnostics and patient-monitoring capabilities to its Diagnostics segment.

QDEL’s Bearish Signal Calls for Caution

The 31.7% three-month advance shows that QDEL has already made a sizable move, but sustaining it may require better cash conversion and evidence that cost improvements can overcome China weakness, respiratory volatility and margin pressure.

The stock currently carries a Zacks Rank #5 (Strong Sell), a bearish signal that reflects unfavorable earnings estimate revisions. QDEL has a Value Score of B, suggesting that its valuation characteristics are relatively favorable. However, the Growth Score of F and Momentum Score of F point to weak growth and price-momentum attributes, while the VGM Score of D indicates an unfavorable overall combination of value, growth and momentum factors.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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