Applied DNA Sciences (APDN): Next Stop, $18?


Coronavirus-focused stocks have been prone to surge majestically after the announcement of positive news. Last Friday, Applied DNA Sciences (APDN) played by the rulebook. Shares more than doubled in the session after the FDA recognized the company’s Linea COVID-19 assay kit as having unique properties.

The Linea COVID-19 assay has been identified as one of only two tests given Emergency Use Authorization (EUA) that could have the ability to detect certain SARS-CoV-2 mutations, including the one found in the U.K. variant of SARS-CoV-2.

The agency believes that tests counting on the identification of several regions of the genome are less likely to be affectedby genetic variation in the SARS-CoV-2 genome, than assays relying on detection of only one region.

The FDA said the Linea COVID-19 assay (along with the TaqPath COVID-19 test from Thermo Fisher) could assist with early detection of new variants in patients which could halt the further spread of infection. Linea’s COVID-19 assay kit was granted emergency use authorization (EUA) by the FDA in May last year.

H.C. Wainwright analyst Yi Chen expects the recognition to provide a meaningful sales boost.

“We note that many single-target COVID-19 molecular tests can detect infections caused by the mutant strain but cannot distinguish it. The fact that the company’s Linea COVID-19 assay is one of the only two FDA-authorized tests to distinguish the highly transmissible B.1.1.7 strain could drive the company’s sales of the assay kit in the near term, in our view,” the 5-star analyst said.

The additional sales could add an extra layer of gloss to APDN’s expanding top line.

Earlier this month, the company said it anticipates F1Q21 revenue (the December quarter) to come in between $1.3-1.6 million, amounting to more than a 300% sequential uptick from the $314,000 of revenue reported in F4Q20. The sales boost was powered mainly by sales of the Linea COVID-19 assay kit and strong demand for safeCircle pooled COVID-19 surveillance testing.

As a result, Chen raised his price target on APDN from $12 to $18, suggesting upside potential of a hefty 103%. Needless to say, Chen’s rating stays a Buy. (To watch Chen’s track record, click here)

Only one other analyst has been keeping an eye on APDN’s progress, also recommending the stock a Buy. APDN’s Moderate Buy consensus rating is backed by a $16.5 average price target, implying gains of ~87% could be in the cards in the year ahead. (See APDN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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