Shares have materially outperformed BTIG's comp group of profitable small-cap diagnostics companies (+34 percent year-to-date versus the group's -18 percent year-to-date) and no longer trade at a discount.
"While we do not see any meaningful negatives for OSUR shares and see room for slight appreciation over time, we feel a lot of good news and higher expectations are now built into shares and would prefer a better entry point," analyst Karen Koski wrote in a note.
However, Koski acknowledged the company's new $18 million HCV test contract, improving operating margins, and a solid balance sheet. But, the analyst prefers to stay on sidelines due to the OraSure's "lumpy sales."
"Though OSUR has met or exceeded its sales guidance every quarter for the past several years, investors care most about HCV testing and DNAG sales, which can be lumpy," Koski continued.
Furthermore, the analyst feels that investors may press the panic button if U.S. HCV sales slightly miss Street views following the recent termination of the co-promotion deal with AbbVie Inc ABBV.
Shares of OraSure closed Friday's regular trading at $8.65.
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