— Jeff Ward, Lehigh Valley News Briefs
Shares of OraSure (NASDAQ:OSUR) jumped Monday after the company announced the repurchase of as much as $40 million of stock.
That didn’t last. Shares fell Tuesday to $3.49 after touching $4.22 the day before. They were higher last week before the buyback was announced.
My view of the Bethlehem-based company is that there is little it can do internally to boost its shares. The stock has foundered since federal money stopped flowing in after the Covid-19 pandemic.
Buybacks boost demand for a stock, but they also raise some issues.
Is using $40 million to buy shares that have been declining for years a good use of cash?
The one thing OraSure has had on its side was about $100 million in cash. So, it couldn’t find a better use — research, a small acquisition, anything — than buying its own shares?
The maker of medical diagnostic kits has meandered along. A buyback means exchanging cash (good) for OraSure stock (not good).
Some buybacks pay off. Apple’s stock repurchases have boosted earnings per share. Earnings divided by shares outstanding equals earnings per share (EPS).
So, if there are fewer shares out there, EPS goes up, but there’s a catch.
Apple (NASDAQ:AAPL) has earnings. OraSure loses money. So much for that.
A small acquisition didn’t help the shares. The buyback hasn’t, so far.
Financial engineering will not make the company more valuable.
OraSure probably needs some kind of deal with a larger company. Revenue falls, money is lost and shareholders’ wealth has been destroyed.
Maybe the company will surprise us. For years, it’s been disappointing.
— Disclosure: I own shares in Apple. I made a couple quick trades on OraSure recently, netting a whopping $620, most of it Monday after the buyback announcement.
I don’t recommend day-trading and I doubt I will make even a small venture into OSUR again.
Lehigh Valley News Briefs 