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It also sells diagnostic equipment from other manufacturers

Co-Diagnostics, Inc., is a molecular diagnostics company that has developed and intends to manufacture and sell reagents

Date : July 24, 2017

CODX Shares: A Huge Opportunity?

New Opportunity:  Co-Diagnostics Inc. (NASDAQ: CODX)

Today’s newest pick is a molecular diagnostics company that has developed and intends to manufacture and sell reagents used for diagnostic tests.

The stock is recent IPO, and our analysis suggests that it may have been beaten down due to largely mechanical reasons related to the distribution of transaction rights for equityholders involved in the IPO itself. However, this is a stock that could generate a ton of excitement going forward, so we wanted to put it in front of you.

Symbol:  CODX

Company:  Co-Diagnostics Inc.

Quote:  http://finance.yahoo.com/q?s=CODX

Latest News:  http://finance.yahoo.com/q/h?s=CODX+Headlines

Company Website: http://codiagnostics.com/


Who is CODX


The technology was created by Dr. Brent Satterfield, who has engineered new diagnostics for Sandia National Laboratories, US Army Medical Research Institute of Infectious Diseases, Department of Homeland Security, National Bio-defense Analysis and Countermeasures Center, the California Dept. of Public Health and numerous others.

Co-Diagnostics, Inc., a Utah corporation, is a molecular diagnostics company that has developed and intends to manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), and to sell diagnostic equipment from other manufacturers as self-contained lab systems (which we refer to as the “MDx device”).

Dr. Brent Satterfield, our Chief Technology Officer, created the Company’s suite of intellectual properties.

“Our scientists were among the first to understand the complex mathematics of DNA test design, to “engineer” a DNA test and to automate algorithms that rapidly screen millions of possible options to pinpoint the optimum design. Dr. Satterfield developed the Company’s intellectual property consisting of the predictive mathematical algorithms and proprietary reagents used in the testing process, which together represent a major advance in Polymerase Chain Reaction (“PCR”) testing systems. CDI technologies are now protected by five granted or pending US patents, as well as certain trade secrets. Our platform allows us to avoid paying existing patent royalties required by other PCR test systems, which has the potential of allowing CDI to sell diagnostic labs and tests at a lower cost than competitors, while generating a profit margin… We will either sell or lease our portable labs to existing diagnostic centers, through sale or lease agreements, and sell the reagents that comprise our proprietary tests.”

Co-Diagnostics’ unique approach to molecular diagnostics is based on a complex form of mathematics called Cooperative Theory, enabling us to create and administer tests significantly faster and at a much lower cost than those developed by traditional methods. Co-Dx molecular reagents can detect the presence of even a single virus.

Co-Diagnostics’ vision is to make diagnostic testing for infectious disease and common genetic disorders so cost effective and easy to use that it can be done at any doctor’s office or point of care facility, anywhere in the world, including those in developing countries.

“In short, Co-Diagnostics is an industry innovator, now at the forefront of molecular diagnostics technology.”

Recent Catalysts

The main thing defining the recent action is the company’s IPO itself. CODX raised $7 million with a downsized offering of 1.2 million shares at $6 a share, below the expected range of $6.35 to $6.75.The action turned lower right off the bat, closing the initial week sharply lower (we saw one report suggesting that shares closed essentially flat, which is far from true, as the stock closed its first week down roughly 7%).

The action continued to the downside in week two, with the stock diving another 20-25%. And therein lies the interest we have.

Often times, a new, fresh IPO will dive in the first 10-14 days. The structure of the deal is at issue, and who got shares into the IPO on a non-lock-up basis. We have a sense that this deal was underwritten into the market with an allowance that granted some folks the ability to monetize the early action. That will almost always lead to a bit of a tumble out of the gates.

But the problem is, for all those folks that just jumped in long on the IPO when it started trading, they see that tumble and get nervous. That nervousness leads to emotional selling, which in turn leads to a possibly very undervalued stock.

Hence the alert today.

Since the IPO, the company put out a press release noting that, concurrent with the recent offering, Co-Diagnostics noteholders converted over $3.7 million of principal and interest, leaving the Company debt free.

The Company intends to use the proceeds from the offering to expand existing operations and the availability of its products.

Proceeds may also be used in the Company’s pursuit of regulatory approvals. Co-Diagnostics intends to license certain technologies to research institutions, as well as to CLIA laboratories interested in using them in the creation of laboratory developed tests (LDTs).


The tests for tuberculosis, hepatitis B and C, malaria, HIV and Zika virus will be among those initially developed and marketed by the Company.

Co-Diagnostics CEO Dwight Egan noted, “We are pleased to have concluded the IPO process and are excited about opportunities that this funding and a presence on NASDAQ will bring. Co-Diagnostics has the utmost confidence in the uniqueness of our intellectual property. We believe that this IP, combined with our hard-working staff and associates, low development costs and the exceptional partner relationships we have been cultivating over the last few years will be the keys to our success, both domestically and across the globe.”

Technical Analysis

As noted above, shares have become sharply oversold in recent action following the IPO. The hourly chart RSI has ticked under the 40 level, suggesting that the stock could potentially be ripe for a bounce at any time at this point.

We don’t have a whole else to go on, technically speaking, given the short time horizon encompassed by the action on the chart right now.

Based on recent company documents, it would appear the company only has out a very small total of shares outstanding, which would suggest this stock should move like a small-float player. We cannot confirm exact totals, but a recent filing alludes to a total in its Warrants documentation:

“The Company hereby agrees to issue and sell to the Representatives (and/or their designees) on the Closing Date an option (“Representatives’ Warrants”) for the purchase of an aggregate of 425,750 shares of Common Stock, representing 5% of the Firm Shares (excluding the Option Shares), for an aggregate purchase price of $100.00.”

While the topic there is not ‘total outstanding shares’, the math is still apparently revealed: 425,750 shares is noted as equal to 5% of the non-option shares of the company. That suggests a total of about 8.5M shares outstanding. However, dividing the current market cap by share price suggests there are around 11.9M shares out. In either case, it’s a small market and necessarily a tight float.


About CODX

CODX (Co-Diagnostics Inc.), a molecular diagnostics company, intends to manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules.

It also sells diagnostic equipment from other manufacturers as self-contained lab systems. The company develops DNA-based testing platform, for the detection of disease, genetic disorders, and other conditions.

Co-Diagnostics, Inc. was founded in 2013 and is headquartered in Salt Lake City, Utah.

Screen Shot 2017-07-24 at 2.21.36 AM

Key Highlights:

  • CODX has under 12M shares outstanding, and likely far less on the float, suggesting that the stock is biased toward very rapid upward action if some energy comes onto the bid.
  • CODX shares have been beaten down as post-IPO selling has taken place, knocking out weak hands along the way, possibly setting up a golden opportunity for those willing to move in fresh.
  • CODX noteholders converted over $3.7 million of principal and interest in the IPO, leaving the Company debt free.
  • CODX is coming off an RSI trough under 40, pointing to a massively oversold stock now heading back the other way.
  • CODX just recorded a MACD Bullish reversal, suggesting a technical change in trend.
  • CODX tests for tuberculosis, hepatitis B and C, malaria, HIV and Zika virus will be among those initially developed and marketed by the Company.


CODX is a hot new IPO that might have just been knocked down into “very interesting” territory based on mechanical dynamics inherent to the structure of the company’s underwriting deal. In any case, shares are oversold and still likely carrying strong potential given that the company managed to eradicate all debt in the flow of the offering.

There are likely plans here that imply a number of buzzworthy headline possibilities ahead for the company, given that it has leadership level IP in house and plans to take on tuberculosis, hepatitis B and C, malaria, HIV and Zika going forward. This may be one to watch.

Disclaimer :

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