News of a distribution agreement with Amazon sent Precipio Inc.’s (PRPO) stock price soaring earlier this week, but it remains unclear whether the stock can maintain its current strength or if it is headed towards a precipice.
Precipio is a laboratory company specializing in cancer and other diagnostic services for physicians that gained global recognition this past December when the U.S. Food and Drug Administration authorized the emergency use of its rapid diagnostic test for COVID-19 antibody testing.
A 20 minute test for COVID anti-bodies
The 20-minute test is able to detect if an individual has developed antibodies to COVID following vaccination or exposure to the virus. Such information is important to the medical world and the fight against the COVID pandemic, as it not only indicates if someone has already been infected by the virus —whether knowingly or unknowingly, but can be used to determine if an individual’s vaccination was successful in helping their body develop the antibodies necessary to ward off future exposure to the virus.
Precipio’s deal with Amazon makes rapid, widespread access to the antibody test a reality for the medical community, enabling physicians to place orders and receive the tests within just two days. For the medical community, the FDA, individual states and the government widespread access to such testing is significant and means the ability to develop a clearer picture of where things stand with the spread of virus at any point in time and to determine the most realistic and effective precautions and guidelines possible.
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At present, sales of Precipio’s test on Amazon are limited to qualified medical point-of care providers such as physicians and other medical facilities. Longer-term, however, the company’s goal is to be able to provide access to consumers on the whole for individual use.
“We are very excited to be working with our partner Nirmidas to get this important rapid test on the largest retail platform in the world”, said Ilan Danieli, Precipio’s Chief Executive Officer. “We look forward to working with other retail outlets, as well as with Nirmidas to advance this product into at-home use, following the receipt of appropriate FDA authorization.”
Investors should exercise some caution on Precipio stock
With the prospects of eventual over-the-counter access to Precipio’s rapid diagnostic test making it appealing, analysts who track the stock have it rated as a buy. Nonetheless, investors should remain somewhat cautious. While Precipio shareholders have experienced a gain of more than 688% over the past year, it is unclear if that momentum can be sustained for the long-term, as the stock experienced a similar rise last July when it first revealed plans for its COVID tests, but then saw its price retreat.
Following news of its COVID strategy on July 30, 2020 Precipio stock went from an opening price of $1.37 to a closing price of $7.00. By early September, however, its price had retreated to the low $2 range.
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Prior to the Amazon announcement, Precipio shares opened at $1.84 on May 3, but closed at $4.95 after the market digested the news. Over the past 12 months, the company’s stock has ranged from a low of $0.65 to a high of $9.18.
While COVID has been a game changer for Precipio stock and its revenue is expected to rise roughly 39% per year, investors should not overlook the red flags that indicate a bit of caution would be wise. The company has yet to turn a profit and is expected to remain unprofitable for the next three years, and it has less than a year’s worth of cash in its coffers. But on the flipside, analysts predict that the company will experience annual earnings growth of 59.6%.