Meridian Bioscience (VIVO - Get Rating) has soared over the past year, jumping from $7.79 to more than $25. Investors took some profit off the table last week when the stock approached the $30 benchmark.

Can VIVO’s run continue? If so, how high will the stock go? Though we cannot provide specific answers to these questions, we can attempt to predict VIVO’s future based on qualitative and quantitative analysis.

Without further ado, let’s take a look at what the future might hold for VIVO.

Why VIVO is on Fire

VIVO, a life science business, makes, markets, and transports products, including diagnostic test kits, biopharma enabling technologies, purified reagents, and more. VIVO products enhance the accuracy and speed of the diagnosis and the treatment of a wide range of medical conditions. VIVO continues to add to its market share, helping treat patients struggling with fungal disease, gastrointestinal infections, and more. A large part of VIVO’s recent success is attributable to the spike in demand for its molecular reagents used by a litany of companies that test for coronavirus.

VIVO’s historical EPS growth rate is around 5%. However, investors are often more concerned with projected growth. If everything goes as planned, VIVO’s EPS will grow by nearly 70% this year, a significantly greater figure than the industry average of around 23%. VIVO also has a sales to total assets ratio of 0.76, meaning the company earns 76 cents in sales for every dollar it has in assets. This figure is impressive, considering the industry average is a mere 0.52. The icing on the cake is VIVO’s anticipated sales growth of 32.4% compared to the industry’s 16.7%.

Priced around $26, VIVO has a forward P/E ratio of a mere 16.42. This is a surprisingly low forward P/E ratio considering VIVO’s industry and forte. It is quite possible VIVO is underpriced at $26. The stock’s 52-week high is $30.65.

The Analysts’ Take on VIVO

VIVO is held in high regard by analysts. Analysts have established an average price target of $35 for the stock. If VIVO hits this price, it will have increased by 17.37%. The analysts’ highest price target for the stock is $37. The analysts’ lowest price target for the stock is $34. These figures are particularly eye-popping considering the fact that VIVO is trading around $26.

VIVO’s POWR Ratings

VIVO is a POWR Ratings stud with an overall A grade, meaning it is a Strong Buy. VIVO has A grades in the Quality and Growth POWR Ratings components. The stock also has B grades in its Momentum and Value components. You can find out more about VIVO’s POWR Ratings in additional components such as Sentiment and Stability by clicking here. Of the 60 publicly traded stocks in the Medical – Diagnostics/Research industry, VIVO is ranked sixth. Investors can find other top stocks in that industry by clicking here.

Will the Rally Continue?

There is a good chance VIVO’s rally will continue. Though it appears several effective coronavirus vaccines are available, the virus will likely continue to morph. The influx of coronavirus variants will hike the need for testing, ultimately helping VIVO all the more as the company’s diagnostic tools will be that much more in demand.

Keep in mind, VIVO was building upward momentum before the start of the pandemic. This past year marks the third straight year in which VIVO boosted both its earnings per share and net income. The demand for diagnostic tests made by VIVO will only continue to increase as healthcare costs skyrocket. This is important as diagnostic testing kits are the company’s primary revenue driver.

VIVO also enjoys a competitive advantage over Becton Dickson (BDX). It is capable of adapting and pivoting with ease regarding the use of molecular reagents for coronavirus testing. VIVO’s brass has made no secret that the company will capitalize on the expansion of the molecular diagnostics global market to nearly $7 billion within the next eight years. 

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VIVO shares fell $0.02 (-0.08%) in after-hours trading Tuesday. Year-to-date, VIVO has gained 39.75%, versus a 4.93% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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