A local analyst has lowered the target stock price of SD Biosensor by almost half from November, predicting the diagnostics company’s earnings will decline with the Covid-19 pandemic transitioning to endemic in Korea.

In a corporate briefing on Wednesday, Kiwoom Securities analyst Huh Hye-min said her brokerage, while maintaining a "Buy" opinion on the company, lowered the target price to 24,000 won from 40,500 won ($30.58) in November of last year.

Huh forecasted that the company's preliminary results in the first quarter of this year will be 356 billion won in sales and 99.8 billion won in operating profit, down 74.7 and 83.9 percent from the same period last year.

She said immunochemical diagnostics, SD Biosensor’s main business, will post 154.7 billion won in the first quarter, down about 87.7 percent from a year earlier.

She also analyzed that SD Biosensor's provisional annual sales and operating profit for this year will be 1.05 trillion won and 249.8 billion won, 64 percent and 78.2 percent lower than last year.

SD Biosensor recorded 2.93 trillion won in sales and 1.14 trillion won in operating profit in 2022.

"This is because major overseas diagnostic companies predicted a decline of more than 70 percent in Covid-19 diagnostic sales in 2023 as the countries are switching to an endemic phase," Huh said.

However, in the short term, Huh said acquiring Meridian Bioscience will reduce the scope of negative growth.

SD Biosensor purchased Meridian for about 2 trillion won in July last year.

In the mid-to-long-term, the company plans to create a stable business structure through a period of refining shared business strategies, cost execution efficiency, and potential synergy capabilities, as a merged entity, Huh said. 

If the business strategy of the merged entity, the continuous glucose monitoring system CGMS products, and services being developed in-house, and the molecular diagnostics STANDARD M10 are successfully visualized, SD Biosensor's valuation will become similar to that of overseas competitors, she added.

As of 10:00 a.m. on Thursday, SD Biosensor's shares stood at 21,200 won, down 3.2 percent from the previous trading day.