Digirad Corporation (DRAD) stock chart

DRAD Stock Rockets 98%! Is DRAD Stock A Buy?

Digirad Corporation (NASDAQ: DRAD) is skyrocketing with a 98% increase in premarket trading. The reason for the sudden gains is the positive DRAD 4th quarter financials that it just released.

DRAD Stock Climbs on 4th Quarter Numbers:

As mentioned early, investors are excited about Digirad this morning after the company announced its financial results for the 4th quarter and 2019. Here’s the quick break down:

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DRAD Revenue – Company revenue for the 4th quarter came in at $36.1 million, which was a 39.4% increase YOY from $25.9 million. For 2019, revenue came in at $114.2 million, representing a 9.6% YOY increase.

DRAD Gross Profit – The gross profits reported a $7.9 million for the 4th quarter, resulting in a 112.2% YOY increase from $3.7 million. For the full year, gross profits rose 21% from $18.3 million to $22.1 million.

DRAD Net Loss – It reported that net loss from its continued operations in the 4th quarter came to $0.3 million ($0.13 per share). This does include merger-related expenses, and if you remove these expenses, the DRAD generated a net income of $27K in the 4th quarter. For 2019, net loss came in at $4.9 million.

Non-GAAP EBITDA – DRAD reported that the non-GAAP adjusted EBITDA came in at $2.8 million. That proved to be a 262.3% increase YOY. On a full-year basis, Non-GAAP adjusted EBITDA rose 29.2% to $7.7 million.

FY 2019 Financial Highlights vs. FY 2018

  • Total revenue increased by 9.6% to $114.2 million from $104.2 million
  • Gross profit increased by 21.0% to $22.1 million from $18.3 million
  • Net loss from continuing operations was $4.9 million (or $2.69 per basic and diluted share) and included $2.3 million of merger related expenses; excluding merger related expenses, net loss from continuing operations was $2.6 million as compared to a net loss from continuing operations of $3.8 million (or $1.90 per basic and diluted share)
  • Non-GAAP adjusted EBITDA from continuing operations increased by 29.2% to $7.7 million from $6.0 million

Should Investors Buy DRAD Stock Now?

My answer is that investors that don’t currently own DRAD stock, should wait for a dip.  Although the numbers are excellent, my concern is that DRAD is jumping a bit too high too soon. The company is experiencing dramatic growth across all metrics.

It is important to remember to keep in mind that in September, DRAD completed the acquisition of ATRM Holdings. With the purchase, the company underwent a fundamental transition.

In fact, with the acquisition, Digirad transformed from a healthcare service provider into a holding company with three business divisions, which are Healthcare, Building & Construction, and Real Estate & Investments.

Bottomline, DRAD is likely to be a good stock pick in the near future, I am just hesitant to buy at the current price. Remember that Digirad would have reported positive income rather than a net loss. Investors should definitely add DRAD stock to their watch list.

Stock Market Today –

The pressure on USD continues to exert the situation with the coronavirus. Although President Trump previously stated that the risk of spreading the disease in the US “remains very low,” the number of infected people is growing, which scares investors.

  • Stocks Drop by More Than 3%…
  • …As Risk Aversion Remains a Key Dynamic in the Market
  • Investors Continue to Seek the Safety of Treasuries
  • Biotech Has Relative Strength as Markets Remain Volatile
  • Futures Point to a Lower Open Today

Over the past 24 hours, seven new cases were recorded in California, and in New York State, the number of patients doubled and amounted to 22 people yesterday. Among the sick, there are employees of Microsoft and Facebook. The latter transferred the employees of the office in San Francisco to work from home.

Yesterday’s January data on industrial orders in the United States were weak. The volume decreased by 0.5%, which is more than the market expected (–0.1%). Today, investors are waiting for the publication of the February data from the US labor market. Unemployment will likely remain at the same level of 3.6%, and Nonfarm Payrolls may reduce from 225K to 175K. The implementation of the forecast may put additional pressure on USD.

Oil quotes today are being actively corrected downwards. The prices are under pressure of the investors’ doubts about the ability of the OPEC cartel and its allies to agree to reduce production further. Yesterday, the cartel decided to cut output by another 1.5 million barrels per day in the second quarter of this year. At the same time, OPEC’s allied countries should reduce their production by 0.5 million barrels. However, Reuter’s sources said today that Russian representatives are still opposed to new reductions and insist only on extending the validity of current volumes. If the deal would not be concluded today, the oil market will again be under severe pressure.