Laboratory Corporation of America Holdings
) recently launched an expanded testing menu to diagnose, treat
and evaluate the course of Inflammatory Bowel Disease (IBD). The
expanded test menu supplements the company's wide portfolio of
digestive disease testing.
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Gastrointestinal (GI) tract illnesses are not easily identifiable
due to non-specific symptoms in the patient. IBD is one the most
prevalent GI tract disorders which causes acute discomfiture.
Ulcerative colitis and Crohn's disease are the two clinical
manifestations of IBD. These forms of IBD are difficult to treat
due to the use of immunosuppressant therapies, biological drugs
LabCorp's expanded testing profile will enable clinicians to
diagnose and treat patients suffering from IBD. Further, the
company's latest offering can distinguish between the two
clinical forms of IBD. The expanded testing menu constitutes
specific antibody markers for both ulcerative colitis and Crohn's
disease. The inclusion of the markers enhances diagnostic
sensitivity and also predicts the likelihood of the severity of
the disease in patients.
LabCorp is continuously working on portfolio expansion to drive
top line. This should help the company to capture larger share of
the $60 billion domestic lab market.
With a burgeoning healthcare expenditure, anticipated expansion
in healthcare coverage, demographic tailwinds and cost efficiency
among others, there is no dearth of positive catalysts for
LabCorp. Given this backdrop, we expect the new addition to its
portfolio to garner incremental revenues.
However, challenging volume environments for testing laboratories
and utilization weaknesses across the healthcare sector are a
cause of concern. Further, margins continue to remain under
pressure. Although the company's share buyback activity might
provide some cushion, we remain watchful of the poor bottom-line
guidance for 2013 which implies that industry trends are not
expected to improve in the near-term.
Accordingly, the stock carries a Zacks Rank #3 (Hold). However,
other healthcare stocks such as
Becton, Dickinson and Company
The Cooper Companies
MWI Veterinary Supply
) are expected to do well. These stocks carry a Zacks Rank #2