Decentralized Diagnostics Will Expand Global Infectious Disease Surveillance

Key Takeaways

• Rapid global market expansion, local partnerships, and broad clinical trial efforts could accelerate revenue growth and create significant first-mover advantages.
  
• Unique cloud-connected platforms and diversified product offerings enable recurring premium revenue streams, improved margins, and resilience beyond pandemic-driven demand.
  
• Heavy net losses, overreliance on a narrow product portfolio, and external manufacturing challenges pose major risks to long-term growth and profitability.

Catalysts

Operates as a molecular diagnostics company that develops, manufactures, and sells reagents used for diagnostic tests that function through the detection and/or analysis of nucleic acid molecules in the United States and internationally.

• Analyst consensus expects commercial launches in major global markets to drive revenue growth, but the breadth and speed of Co-Diagnostics' simultaneous multi-country clinical trials and regulatory submissions-backed by local manufacturing and strategic alliances in India and Africa-could result in much faster, broader market penetration and an accelerated inflection in top-line revenue versus peer diagnostics rollouts.
  
• While analysts broadly see commercial launches in decentralized and point-of-care settings as an incremental growth driver, the company's proactive pursuit of at-home and pharmacy distribution, coupled with a cloud-connected PCR platform enabling real-time infectious disease surveillance, positions Co-Diagnostics for exponential recurring revenue streams and premium pricing opportunities, supporting step-function expansions in gross margin and EBITDA.
  
• The company's proprietary software ecosystem and cloud-based data analytics not only lock in customers but could create a first-mover advantage for government partnerships in pandemic prevention and surveillance initiatives, establishing large-scale institutional contracts and multi-year revenue visibility.
  
• Strong grant funding relationships with entities like the NIH and Gates Foundation substantially de-risk R&D investment, supporting an expanding test menu-including new assays for emerging and chronic diseases-which can drive sustained long-term earnings growth and diversify revenue away from cyclical pandemic-related swings.
  
• With a scalable domestic and international manufacturing footprint, combined with demonstrated improvements in operational efficiency, Co-Diagnostics is positioned to achieve rapid margin expansion and positive operating leverage as volumes accelerate post-commercialization, directly benefiting future net income and free cash flow.

Co-Diagnostics Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Co-Diagnostics compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Co-Diagnostics's revenue will grow by 278.9% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Co-Diagnostics will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Co-Diagnostics's profit margin will increase from -3586.0% to the average US Medical Equipment industry of 12.4% in 3 years.
• If Co-Diagnostics's profit margin were to converge on the industry average, you could expect earnings to reach $6.8 million (and earnings per share of $0.15) by about August 2028, up from $-36.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 81.3x on those 2028 earnings, up from -0.3x today. This future PE is greater than the current PE for the US Medical Equipment industry at 27.4x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.84%, as per the Simply Wall St company report.

Co-Diagnostics Future Earnings Per Share Growth

Risks

• Co-Diagnostics reported a significant drop in revenue, with only two hundred thousand dollars in total revenue for the second quarter of 2025 compared to two point seven million dollars in the prior year, indicating difficulties in sustaining sales momentum and a greater reliance on unpredictable grant income, which could negatively impact long-term revenue growth.
  
• The company continues to generate substantial net losses, reporting a net loss of seven point seven million dollars and negative EBITDA of seven point two million dollars in the most recent quarter, suggesting persistent struggles to achieve profitability or healthy net margins despite cost-cutting efforts.
  
• The company's future growth is tied to a narrow pipeline of four PCR-based diagnostic tests and overdependence on a single platform, making it highly vulnerable to technological advances, competitive launches from larger firms with integrated digital health solutions, and sector consolidation, all of which could erode future earnings.
  
• Commercialization timelines are contingent on timely clinical validation and regulatory approvals in the US, India, and Africa, but escalating global regulatory scrutiny and complex approval processes, especially for novel diagnostics, may delay market launches, drive up compliance costs, and drag down both near-term and long-term revenues.
  
• Co-Diagnostics is dependent on joint ventures and third-party manufacturing, particularly in India, which exposes it to geopolitical, supply chain, and execution risks; difficulties in scaling distribution or disruptions in the supply of biotech reagents and components could raise costs and suppress topline growth.

Valuation

• The assumed bullish price target for Co-Diagnostics is $10.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Co-Diagnostics's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $1.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $54.6 million, earnings will come to $6.8 million, and it would be trading on a PE ratio of 81.3x, assuming you use a discount rate of 7.8%.
  
• Given the current share price of $0.29, the bullish analyst price target of $10.0 is 97.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.