Chembio Diagnostics Inc (NASDAQ: CEMI) is flying in the market this morning after the company issued news on Friday surrounding the commercial launch of a point-of-care COVID-19/Flu A&B test.
Here’s what’s happening:
Chembio Diagnostics Announces Commercial Launch
In the press release, Chembio Diagnostics said that it will be launching its in-licensed rapid point-of-care COVID-19/Flu A&B test. The test has received Emergency Use Authorization from the United States Food and Drug Administration.
In the release, the company went on to explain that the test was designed for use in decentralized and traditional testing settings. Moreover, the company said that it has plenty of product inventory currently on-hand and immediately available for shipment across the United States.
Importantly, the test has been approved for use in laboratories with a CLIA waiver license. It is known to produce results in just 15 minutes and requires no special equipment. Moreover, the test is able to simultaneously differentiate SARS-CoV-2 antigens and influenza Type A and Type B infections from a single swab.
In a statement, Charles Caso, Vice President of Sales and Marketing at Chembio Diagnostics, had the following to offer:
As COVID-19 converges with the flu, it is critical for physicians to be able to quickly differentiate between these viruses at the point-of-care, which present with nearly identical symptoms, in order to take appropriate clinical actions and maximize efficient use of healthcare resources.
Based on recent research, we expect that the spread of COVID-19 will eventually transition from a pandemic to an endemic state, with the virus surviving among the population at a lower incidence. In this scenario, coupled with the return to normalcy in society, we see COVID-19 testing remaining a crucial and integral component of broader respiratory testing.
These Gains Could Go Far Higher
The strong movement that we’re seeing from Chembio Diagnostics this morning may just be the beginning. In fact, a short squeeze may be on the horizon.
At the moment, about 15% of the volume on the stock is sold short. While it’s not the 20% I would normally look for when looking for short squeeze opportunities, with the positive news recently released by the company, this could be plenty to effect a short squeeze as those that have short positions run for cover.
At the same time, the public float on the stock is under 19 million shares. While that may sound like a lot of shares, that’s a drop in the bucket on the stock market. With such a small amount of shares available, and volume quickly ticking up, we could see the scales tip in terms of supply and demand, sending the stock for tremendous short-term gains far and beyond what we’ve seen so far this morning.
The Bottom Line
The bottom line here is simple. Chembio Diagnostics announced that it will be launching its COVID-19/Flu A&B rapid test, which means it will soon drive revenue from the sale of these tests. At the same time, demand for tests like these is expected to continue to be strong for the foreseeable future, making this a huge opportunity.
All the while, CEMI stock trades with pretty heavy short volume and a very low public float. Combine the two and you have the technical aspects that could make for a dramatic run, especially with a commercial launch acting as the catalyst.
All in all, if you’re not paying attention to this stock yet, you could be missing a major opportunity.