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QuidelOrtho Corporation QDEL is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by mixed first-quarter 2026 results, is expected to contribute further, along with progress in cost-saving initiatives. However, risks due to overdependence on the respiratory business persist.

This Zacks Rank #2 (Buy) company has lost 41.6% in the year-to-date period compared with the 21.8% decline of the industry. The S&P 500 has witnessed 9.5% growth in the said time frame.

The renowned rapid diagnostic testing solutions provider has a market capitalization of $1.12 billion. QuidelOrtho’s earnings yield of 11.4% compares favorably with the industry’s 3.1%. The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed once and met estimates once, delivering an average negative surprise of 15.7%.

Factors Favoring QDEL’s Growth

Robust Product Portfolio: QuidelOrtho’s diversified portfolio across Labs, Immunohematology, Point of Care and Molecular Diagnostics helps cushion demand fluctuations across testing categories. In the first quarter of 2026, Labs remained the largest revenue contributor at $353.1 million, followed by Immunohematology at $138.3 million and Point of Care at $112.8 million.

The company's Sofia platform and QuickVue franchise continue to provide scale in respiratory testing, with management noting stable market share during the quarter. For 2026, QuidelOrtho expects a typical flu season and stable testing protocols, with guidance based on a 50-55 million annual flu testing market and flat COVID-related revenues compared with 2025.

Growth initiatives remain focused on menu expansion and international penetration, with the U.S. launch of its high-sensitivity troponin assay already reaching more than 300 customer shipments and the rollout of the VITROS 450 system targeting lower-volume laboratories, which management believes can drive mid-single-digit long-term growth in the Labs business.

Progress on Cost-Saving Initiatives: QuidelOrtho is leveraging restructuring and productivity initiatives to expand margins and support investments in new platforms. In first-quarter 2026, adjusted operating expenses declined 2% year over year, led by a 19% reduction in R&D spending, while management reaffirmed its full-year adjusted EBITDA margin target of approximately 23%.

Through its Optimization Plan, the company is pursuing procurement efficiencies, facility consolidation and distribution rationalization, expecting around $50 million in net cost savings through 2027 despite cumulative pre-tax charges of about $100 million. QuidelOrtho is also implementing supply-chain measures to offset tariff-related cost pressures, while the wind-down of its U.S. Donor Screening business, expected to be substantially complete by mid-2026, and normalized working capital are projected to support stronger free cash flow generation in the second half of 2026.

Mixed Q1 Results: QuidelOrtho ended the first quarter of 2026 with mixed results, where revenues surpassed the Zacks Consensus Estimate, but earnings missed significantly. The company continued to witness strength in its Labs and Immunohematology business units, while solid growth across Latin America and resilient performance in EMEA and JPAC were encouraging.

However, persistent weakness in respiratory testing continued to weigh heavily on the top line, with Point of Care and Donor Screening businesses also posting sharp declines. The company’s bottom line deteriorated year over year, while gross and operating margins contracted significantly due to lower volumes and an unfavorable business mix.

Factors That May Offset QDEL’s Gains

Overdependence on Respiratory Segment: Respiratory testing remains a key swing factor for QuidelOrtho’s revenues and profitability despite the post-pandemic reset. First-quarter 2026 results were pressured by a milder and shorter respiratory season, with influenza-like illness visits declining roughly 30% year over year and respiratory revenues totaling $68 million. While management indicated that testing protocols and market share remained stable, suggesting the weakness was demand-driven rather than competitive, the lower respiratory contribution reduced product mix and contributed to a 630-basis point decline in adjusted gross margin.

For 2026, the company assumes a 50-55 million annual flu market and flat COVID revenues compared with 2025, but still expects full-year respiratory revenues to decline, implying that even modest shifts in seasonality or testing volumes could continue to create significant variability in quarterly results and cash generation.

Estimate Trend

QuidelOrtho is witnessing a negative estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings has moved south to $1.87 per share.

The Zacks Consensus Estimate for the company’s second-quarter 2026 revenues is pegged at $614.6 million, indicating 0.12% growth from the year-ago quarter’s reported number.

Other Key Picks

Some other top-ranked stocks from the broader medical space are West Pharmaceutical WST, Intuitive Surgical ISRG and Cardinal Health CAH, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

West Pharmaceutical reported first-quarter 2026 earnings per share (EPS) of $2.13, which beat the Zacks Consensus Estimate by 26.8%. Revenues of $844.9 million surpassed the Zacks Consensus Estimate by 8.5%.

West Pharmaceutical has an estimated long-term earnings growth rate of 13.9%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.4%.

Intuitive Surgical reported first-quarter 2026 adjusted EPS of $2.50, which beat the Zacks Consensus Estimate by 20.2%. Revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 6.2%.

Intuitive Surgical has an estimated long-term earnings growth rate of 14.3%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.8%.

Cardinal Health reported a third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.

Cardinal Health has an estimated long-term earnings growth rate of 17%. CAH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 10.3%.

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