Recently, Quest Diagnostics DGX received FDA’s emergency use authorization (EUA) for its self-collection test kit for COVID-19. In response to the news, shares of the company rallied 2.4% to $118.28 at Friday’s close.
This latest development by Quest Diagnostics, among the company’s many other advancements related to coronavirus, is expected to boost its customer base.
Self-Collection Kit at a Glance
This kit can be used by individuals to self-collect a nasal specimen in healthcare settings or even at home when approved to be necessary by a healthcare provider. Per Quest Diagnostics, the kit will allow an individual to swab the front part of the nostril. This is also suitable for used on children (supervised by an adult). The specimens have to be shipped overnight via FedEx at room temperature (without a frozen cold pack).
Specimens collected using the kit may be tested with the Quest Diagnostics SARS-CoV-2 RT-PCR test, which received FDA’s EUA in March. RT-PCR testing aids in diagnosing infection with SARS-CoV-2, the virus that causes COVID-19.
The company currently expects to have more than a half-million kits available by the end of June, with plans to make additional kits available on an ongoing basis.
COVID-19 Related Progress So Far
As a remarkable breakthrough, Quest Diagnostics launched its SARS-CoV-2 RT-PCR test service on Mar 9. This test got the green light from the FDA’s EUA on Mar 17. Per the company’s Apr 22 update (first-quarter earnings call), it performed and reported results of nearly 1 million tests across the United States. This is approximately a quarter of all testing done in the United States. The latest EUA of self-collection test kit might provide further impetus to the company’s already strong sales of this test service.
In the meantime, the company implemented a higher throughput in vitro diagnostic test for coronavirus from Roche at 12 Quest Diagnostics laboratories across the United States. Currently, through these 12 laboratories across the nation, Quest Diagnostics can perform more than 50,000 COVID-19 tests per day.
From April, the company has begun to perform blood-based antibody testing as well.
The company has also joined forces with Walmart to make testing sites available to anyone who may be exhibiting symptoms of the virus, as well as all health care workers and first responders, whether or not they're exhibiting symptoms. Meanwhile the CMS’ recent decision to increase the reimbursement for high throughput molecular COVID-19 testing to $100 is a favorable update for Quest Diagnostics.
Per a report by Grand View Research, the global clinical laboratory tests market was valued at $176.7 billion in 2019 and is expected to register CAGR of 7.1% between 2020 and 2027. Factors like rising prevalence of chronic diseases and growing awareness among the health-conscious population are expected to drive the market.
Considering the rising impact of COVID-19, and at this moment, when the U.S. government is focusing entirely on increasing the number of tests to perform daily, Quest Diagnostics seems to be well positioned in the niche market.
Quest Diagnostics has outperformed its industry over the past six months. The stock has gained 11.1% compared with 3.3% rise of the industry.
Zacks Rank & Stocks to Consider
Currently, Quest Diagnostics carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Aphria Inc. APHA, Surmodics, Inc. SRDX and Owens Minor, Inc. OMI.
Aphria’s long-term earnings growth rate is projected to be 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Surmodics’ long-term earnings growth rate is estimated to be 10%. The company presently sports a Zacks Rank #1.
Owens Minor’s long-term earnings growth rate is estimated to be 8.3%. It currently carries a Zacks Rank #2.
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