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Gates Foundation Deal Opens Things Up For OraSure

Gates Foundation Deal Opens Things Up For OraSure
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Canaccord Genuity said in note Tuesday the Gates Foundation agreement helps open up the spigot for OraSure Technologies, Inc. (NASDAQ: OSUR). The firm lifted its price target in the wake of the news.

Canaccord noted that the deal is similar to Danaher Corporation (NYSE: DHR) unit Cepheid's TB test via its HBDC program.

Multimillion-Dollar Revenue Opportunity

Elaborating on the deal terms, analyst Mark Massaro said OraSure has agreed with the Gates Foundation to deploy its new OraQuick HIV self-test to about 50 developing countries across Africa and Asia. The agreement would fetch the company funding of about $20 million over four years.


The analyst thinks the news would add upside of about $3 million to $6 million of revenue per year to his model, beginning in 2018, with some partial lift in 2017.

Canaccord expects OraSure to capture revenues per test in the range of $4-$5 on average. Although the rate is at a lower price of its professional test, the firm expects it to deliver operating margins at or above 20 percent.

WHO Prequal To Be Very-Near-Term Catalyst

The firm sees another upcoming catalyst in the form of the World Health Organization prequal, which is likely to move the needle and advance orders. WHO has set a target of 90–90–90, which calls for scaling up of testing to make 90 percent of the people with HIV be aware of their infection. About 90 percent of the people with HIV are given antiretroviral treatment, and 90 percent of those on Antiretroviral treatment have undetectable level of HIV in their blood.

"OSUR expects WHO pre-qual will allow for significant expansion of its test both for regulatory and funding reasons, and is likely very near term," the firm said.

The firm also noted that the HIV self-test, the company has launched via a pilot program is a success.

Lifting Price Target

Canaccord believes OraSure's momentum continues on the back of multiple shots on goal across three major growth drivers, namely Hepatitis C, Molecular Collections and HIV Self-test.

As such, Canaccord reiterated its Buy rating on the shares of OraSure and lifted its price target from $15 to $18, to reflect large, near-term, multi-pronged opportunities that could provide upside to Street estimates.

"We see OSUR's OraQuick HIV self-test as the best positioned, affordable, oral fluid rapid test available, given its ease-of-use and exceptional quality," the firm concluded.

At the time of writing, shares of OraSure were rallying 10.37 percent to $17.35.

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Image Credit: "Randall Tobias, U.S. Global AIDS Coordinator, gets publicly tested for HIV/AIDS in Ethiopia in an effort to reduce the stigma about getting tested. {{US-DOS}}" by United States Department of State, [public domain], via Wikimedia Commons

Latest Ratings for OSUR

Jul 2018Stephens & Co.DowngradesOverweightEqual-Weight
Nov 2017JefferiesDowngradesBuyHold
Aug 2017Canaccord GenuityMaintainsBuy

View More Analyst Ratings for OSUR
View the Latest Analyst Ratings

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