Qiagen has raised its outlook for 2020 and 2021 amid continued demand for COVID-19 tests and growing confidence in its post-pandemic future.
The revised guidance foresees fourth quarter sales growth of at least 32%, up from 24% in the outlook Qiagen issued in late October. Analysts at Jefferies said Qiagen was expected to raise its near-term targets.
Qiagen now expects sales to grow 18% to 20% next year, despite the progress of vaccines raising the possibility that demand for PCR testing will fall. The forecast reflects a belief that non-coronavirus products can achieve double-digit growth once the pandemic is over. However, William Blair analysts in a Wednesday note said they "would still like to see some signs of execution on growth in a post-COVID-19 world."
The past 12 months have seen many twists and turns at Qiagen. Having hit a rocky patch late last year, Qiagen looked set to be bought by Thermo Fisher Scientific, only for COVID-19 to raise investor confidence in its prospects as a standalone business. Qiagen now faces the challenge of living up to the expectations that led investors to reject Thermo Fisher’s offer.
Executives at Qiagen set out how they plan to face that challenge at an investor event on Tuesday, using the event to raise its outlook and lay out the areas it foresees driving growth in 2021 and beyond.
COVID-19 has driven growth in 2020, offsetting falling sales in other parts of the business, but Qiagen is making the case that the pandemic has accelerated its long-term growth strategy and set it up to prosper even as the coronavirus crisis eases. The pitch rests, in part, on Qiagen’s more than 3,300 new instrument placements in 2020.
Qiagen expects to exit the pandemic positioned to access new markets in near-patient testing. The easing of the pandemic could also benefit routine testing. Even as vaccines roll out, Qiagen expects there to remain a need for COVID-19 testing and foresees new opportunities for serology and T-cell tests that evaluate short and long-term immunity. The company also believes there will be growing demand for syndromic tests like those sold for QIAstat-Dx.
The pitch is yet to persuade everyone that Qiagen has a very bright post-pandemic future, though. Analysts at Jefferies are more bullish than many peers on the near and mid-term prospects of Qiagen. Yet, the Jefferies analysts are more conservative than Qiagen's management, for example on the odds of double-digit growth of non-COVID-19 products, and foresee multiple pitfalls ahead of the company.
"We still see risks that a stand-alone Qiagen could fail to deliver on the long-hoped-for future growth and margin expansion, ex-COVID-19. Although some revenues may be sustained from the pandemic as the QIAstat-Dx installed base ramps up with associated future pull-through, questions remain on mid-term growth drivers and the longevity of sample prep solutions for COVID-19 testing," the analysts wrote in a note to investors.
William Blair analysts also pointed to several risks, including the company's ability to manage multiple businesses, competition in several key growth areas, a faster-than-anticipated drop-off in COVID-19 related product sales, as well as the impact on its corporate culture following the failed acquisition by Thermo Fisher.
Still, investors reacted favorably to the raising of Qiagen’s targets and comments at the event, sending shares in the $11.5 billion business up almost 3% on Tuesday.