Chembio Sinks 59% In Pre-Market As FDA Revokes Its Covid-19 Test; Top Analyst Cuts Rating
Shares in Chembio Diagnostics (CEMI) sank 59% after the U.S. Food and Drug Administration revoked the Emergency Use Authorization (EUA) of its DPP (Dual Path Platform) COVID-19 serology test.
The stock plunged to $4.10 in pre-market trading after the FDA said that there were performance concerns with the accuracy of Chembio’s SARS-CoV-2 antibody test. The U.S. regulator added that it made the decision to revoke the EUA authorization for the serology test as “benefits no longer outweigh its risks”.
“This test generates a higher than expected rate of false results and higher than that reflected in the authorized labeling for the device,” the FDA said in a statement. “Under the current circumstances of the public health emergency, it is not reasonable to believe that the test may be effective in detecting antibodies against SARS-CoV-2.”
The antibody test was one of the first to be granted EUA by the FDA in April. Chembio had been touted as one among a list of companies with the potential to bring a viable COVID-19 test to the market. The potential to deliver a reliable test has fueled impressive gains for the stock this year helping the value to almost double.
Chembio’s share price dropped 5% to $9.93 at the close on Tuesday.
In response to the FDA decision, five-star analyst Max Masucci at Canaccord Genuity downgraded the stock to a Hold and slashed the price target to $7 (30% downside potential) from $22, saying that his Buy thesis is no longer intact.
“While the FDA’s revocation of CEMI’s EUA for its serology test comes as a surprise, it serves as a humble reminder that execution and transparency risks are magnified for micro-cap companies,” Masucci wrote in a note to investors. “Following the update, we materially reduce our revenues and have diminished expectations for CEMI’s ability to seed the market with analyzers for future test launches.”
For now, the stock still scores a Moderate Buy analyst consensus with 3 Hold ratings versus 2 Buy ratings. The $16.33 average price target indicates 64% upside potential in the shares in the coming year. (See Chembio stock analysis on TipRanks)
Fulgent Pops 18% In After-Market On FDA Nod For Covid-19 Home Test
AstraZeneca Inks Europe Deal For 400M Covid-19 Vaccine Doses
Israel Is Said To Be In Talks To Buy Moderna’s Covid-19 Vaccine Candidate