(Bloomberg) — The biggest gainer on New Zealand’s benchmark index follows familiar themes for successful stocks on the gauge: a strong focus on the U.S. and an ability to tap the stay-at-home thematic.
Pacific Edge Ltd. has soared 567% to become the top stock on the S&P/NZX 50 Gross Index this year, buoyed by its bladder cancer tests that can be taken at home. U.S. health practitioners have adopted the lockdown-friendly cancer screening kit in lieu of appointments that would otherwise need to be done in medical centers overwhelmed by coronavirus.
“Social distancing, stretched hospitals and those with cancer being specifically susceptible to the virus” have underpinned Pacific Edge’s rally, said Jeremy Sullivan, an investment adviser at brokerage Hamilton Hindin Greene in Christchurch. The diagnostic firm has “convinced a few skeptics and will have a foothold which they did not have pre-Covid.”
New Zealand’s equity benchmark has hit multiple records this year by luring investors who are embracing stay-at-home plays that tap broader international markets. Pacific Edge gets more than 85% of its revenue in the U.S. Pushpay Holdings Ltd., which operates its digital payment platform for churches mostly in the world’s largest economy, is the second-top performer in 2020.
Pacific Edge saw revenue from U.S. tests rise 46% in the six months to Sept. 30, as physicians turned to telemedicine amid the pandemic. U.S. Covid-19 hospitalizations increased by more than 1,000 a day at the end of November, data from the Department of Health and Human Services show.
The Dunedin-based company’s main product, Cxbladder, is a suite of urine tests that can detect or rule out bladder cancer and allow patients to send samples to laboratories without visiting a clinic, according to the firm’s website.
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Shares in the NZ$580.3 million ($410.5 million) firm rose as much as 3.9% in Wellington on Friday, the top performer on the benchmark. They have tripled since costs for the screening became eligible for reimbursement under some U.S. government-run health plans in July.
Pacific Edge is targeting pacts with health plan providers such as Kaiser Permanente and Centers for Medicare and Medicaid Services to drive revenue and operating cashflow growth, as the prospect of a coronavirus vaccine may lessen demand for the product as a stay-at-home alternative. There are also plans for the commercial launch of a fourth Cxbladder test in fiscal year 2022.
Still, sell-side analysts haven’t offered much guidance, with the firm attracting just a single analyst rating, according to data compiled by Bloomberg.
(Updates year-to-date performance in headline, second paragraph, chart; market cap in third to last paragraph)
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