Growing Presence of Seegene Amid 'Twin-demic' Possibility... Target Price Raised Repeatedly

[Asia Economy Reporter Park Jihwan] As the possibility of a 'twindemic'?the simultaneous outbreak of the novel coronavirus disease (COVID-19) and influenza?this winter increases, the presence of Seegene, the leading company in diagnostic kits, is growing. An earnings surprise is expected in the third-quarter results, and an increase in exports centered on diagnostic kits for both COVID-19 and influenza is anticipated.

According to the Korea Exchange on the 27th, Seegene closed at 244,100 KRW on the 25th, down 11,400 KRW (4.46%) from the previous day. Although the stock price has recently shown a slight downward trend, Seegene has maintained a soaring trajectory along with COVID-19 this year. The stock price, which was around 30,000 KRW at the beginning of the year, has risen more than eightfold due to the COVID-19 pandemic.

Mirae Asset Daewoo evaluated that an earnings surprise is expected in Seegene's third-quarter performance this year. They forecast third-quarter sales and operating profit to be 376.5 billion KRW and 165.8 billion KRW, respectively, representing increases of 781% and 2,323% compared to the same period last year.

Researcher Kim Choonghyun of Mirae Asset Daewoo said, "Considering the current trend, it is highly likely that growth compared to the same period last year will be achieved until the first quarter of next year," and added, "The expansion of market share in Europe and South America, the main markets due to COVID-19, is positive."

The increase in performance has led securities firms to raise their target stock prices. Mirae Asset Daewoo raised Seegene's target price from 268,800 KRW to 300,000 KRW. Shinhan Investment Corp. increased it from 320,000 KRW to 350,000 KRW.

However, there are also concerning aspects. Above all, compared to global diagnostic companies, the dependence on COVID-19 diagnostic kit sales is excessively high. If the spread of COVID-19 decreases, stock price volatility is also likely to increase.

Researcher Kim Choonghyun pointed out, "The significantly high dependence on COVID-19 diagnostic kits compared to global diagnostic companies is a drawback," and warned, "If a phase of declining COVID-19 spread occurs, stock price volatility is likely to increase."