QDEL: AI Flags Bearish Setup on QuidelOrtho

QuidelOrtho provides diagnostic testing solutions for various markets under numerous brand names, including 'AdenoPlus', 'BIOVUE', 'FreshCells', 'InflammaDry', 'Lyra', 'MeterPro', 'MicroVue', 'Ortho', 'Ortho Clinical Diagnostics', 'Ortho Connect', 'Ortho Optix', 'Ortho Plus', 'ORTHO VISION', 'QuickVue', 'Quidel', 'QuidelOrtho', 'QVue', 'Savanna', 'Sofia', 'Solana', 'Thyretain', 'Triage', 'ValuMetrix', 'Virena', and 'VITROS'. The company operates through Labs, Transfusion Medicine (Immunohematology and Donor Screening), Point of Care, and Molecular Diagnostics business units, serving customers such as physician offices, hospitals, clinical laboratories, reference laboratories, urgent care clinics, universities, retail clinics, pharmacies, wellness screening centers, blood banks, and donor centers, as well as individual consumers. QuidelOrtho aims to advance diagnostics to power a healthier future by offering quality diagnostics, a broad test portfolio, and service to customers across more than 130 countries. Their business strategy focuses on customer-centric decision making and behavior, focusing on economic profit and return on invested capital.

QDEL's technical outlook appears mildly bearish. The stock has experienced a downtrend over the past 90 days, falling from approximately $30 in early July to around $27 in early November. The price closed recently at $27.11, which is below its 50-day SMA of $28.43, and well below the 200-day SMA of $31.34. The 21-day EMA is also trending downwards, currently at $28.30. Momentum indicators suggest weakness. The RSI_14 is at 46.78, indicating neutral to slightly bearish sentiment, while the MACD is negative, with the MACD line below the signal line, suggesting further potential downside. The Stochastic oscillator shows the %K line below %D, confirming the bearish bias. The ADX is relatively low at 15.41, indicating a weak trend. The recent price action shows a failure to sustain rallies, with lower highs and lower lows dominating the chart. Given these factors, QDEL is likely to continue its downtrend over the next 1-3 months.

QuidelOrtho's MD&A reveals a mixed performance with some concerning trends. `Total revenues` for the three months ended June 29, 2025, decreased by 4% to $613.9 million compared to $637.0 million in the prior year. The six-month figures show a similar decline, with revenues decreasing by 3% to $1,306.7 million. While Labs revenue increased, this was offset by declines in Donor Screening and Point of Care. The wind-down of the U.S. donor screening portfolio significantly impacted revenue, with a 61% decrease in that segment. Cost of sales improved, leading to a slightly better gross margin; cost of sales, excluding amortization, decreased to 55.2% of `Total revenues`, compared to 56.7% for the same period last year. However, `Net cash provided by operating activities` for the six months ended June 29, 2025, was $18.8 million, a significant drop from the $98.6 million *used for* operating activities in the prior year, indicating strain on cash flow. Management's outlook suggests continued fluctuations in demand and pricing pressures, particularly in respiratory products, due to factors like 'increased supply' and 'new variants'. The company is implementing an 'Optimization Plan' aiming for $50 million in net cost savings through 2027, but this involves restructuring charges of approximately $100 million. The company is also discontinuing the development of the Savanna platform. Overall, while cost-saving initiatives are underway, revenue declines and cash flow concerns present challenges in the near term.

QuidelOrtho's Q2 2025 earnings call reveals a moderately bullish outlook, driven by solid performance in key business segments and successful cost-saving initiatives. While total revenue decreased due to lower COVID and Donor Screening revenue, excluding these factors, revenue grew 1%. Management highlighted consistent performance in Labs and Immunohematology, with organic constant currency growth of 5% and 3%, respectively. Adjusted EBITDA margin improved by 330 basis points, and adjusted diluted EPS saw meaningful improvement, reflecting the positive impact of commercial and operational improvements. CEO Brian Blaser noted that the company is 'pleased with the progress we've made on our top priorities and the strength of our underlying business.' The company is narrowing its range for China to mid-single-digit growth, indicating confidence in that market. Although COVID revenue expectations for the full year have been lowered to $70 million to $100 million, the company is reiterating its full year 2025 financial guidance, expecting total revenue between $2.6 billion and $2.81 billion and adjusted EBITDA of $575 million to $615 million.

QDEL's financial performance reveals a concerning trend. While revenue has fluctuated, it decreased from $709.7M in Q1 2024 to $613.9M in Q2 2025. Profitability has also deteriorated significantly, with the `grossProfitRatio` declining from 0.391 in Q1 2024 to 0.922 in Q2 2025, despite an increase in gross profit ($277.8M vs $566M). The company's operating cash flow is highly variable and recently turned negative, with an `operatingCashFlow` of -$46.8M in the latest quarter, compared to $65.6M in Q1 2025. Furthermore, QDEL's solvency is weakening, as evidenced by the increase in `totalDebt` from $2.61B in Q1 2024 to $690.6M in Q2 2025. The substantial net loss of $255.4M in Q2 2025 raises significant concerns. The combination of declining revenue, volatile profitability, negative cash flow, and increasing debt suggests a weakening financial position, raising concerns about the company's near-term financial health.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.