A Bidding War Could Send This COVID-19 Stock Higher

I've seen this many times.

When a company agrees to take over another, then emerges another bidder.

That's what could happen to Qiagen NV (NYSE:QGEN) in the coming days.

Qiagen NV (NYSE:QGEN) is a German-based testing and diagnostics company.

With testing for COVID-19 still lagging in many countries, including the U.S., companies with approved test kits and solutions are in demand, such as Qiagen.

On Mar. 3, 2020, Thermo Fisher Scientific ( NYSE:TMO) agreed to buy shares of Qiagen ( NYSE:QGEN) valued at €39 ($43.34) per share in cash.

This news sent shares soaring from $35 to $41.92 per share.

After that announcement there has been a lot of exciting developments from this company.

Last week, United Parcel Services (UPS) announced it's helping Qiagen (QGEN) deliver nucleic acid extraction kits as well as the biotech company's COVID-19 testing kits around the world.

On March 31, 2020, Qiagen received emergency use authorization (EUA) from the U.S. Food and Drug Administration (FDA) for its newly developed QIAstat-Dx Respiratory SARS-CoV-2 Panel test.

This is the first syndromic testing solution in the U.S. and delivers results in about one hour.
Share prices of Qiagen pulled back during the market drop in March but since rebounded to levels when the deal was announced.

However, something odd started happening just a few days ago.

On Friday, my system alerted me to a new bullish position being opened in QGEN option contracts.

They opened a bullish position through call options contracts that control $7,300,800 worth of shares.

We often see savvy investors leverage the options market to position themselves for massive gains ahead of a big move in that underlying.

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I have seen this time and time again in the financial markets.

Today, my system alerted me again that someone was opening another bullish position through call options contracts that control $6,986,340 worth of shares.

Here's where things get really interesting…

They have 23 days to be right or they will lose every single cent.

So that is why I take note of this type of action.

What do they know others don’t?

With so much money at stake, they must be very confident.

This type of buying isn't an ordinary investor like you and I.

Qiagen isn’t a particularly well-known company. It is established in the diagnostics industry, with a quite-respectable $9.6 billion price tag. But it doesn’t usually see option interest like this.

Now, we don’t have a crystal ball here. But the urgency to ship out as many test kits, specifically in the U.S. has never been higher.

As states continue to debate opening up their economies again, demand for testing will only increase from here.

Finding a company with approved kits not only in the U.S. but across the world is a real opportunity.

Finding one that has a huge amount of money expecting a move higher is the icing on the cake.

QGEN isn’t alone in its field, however. While it has more experience in the diagnostics business than many, it isn’t the only one to develop and ship out COVID-19 tests.

However, this is one of those rare instances where competition just doesn’t matter much. The demand for these kits is so high, that companies like QGEN aren’t really competing to beat other diagnostics companies to market.

But, its relationships with the FDA and other health and safety boards around the world are surely one reason why another company could be looking at QGEN for a new strategic acquisition.

The deal with Thermo Fisher Scientific doesn't close until next year.

That leaves the window open for someone who could come in at a higher bid.

This is the type of activity I track and provide to subscribers of my Hot Money Trader service.

However, It’s hard to ignore this activity.

And it could pay off to hitch your cart to these confident investors.