DGX Supports Chronic Kidney Guide - Analyst Blog
March 15 2013 - 3:00PM
Zacks
Leading diagnostic testing player Quest
Diagnostics (DGX) did not miss World Kidney Day. The
company came up to support the updated guideline of the National
Kidney Foundation Kidney Disease Outcomes Quality Initiative
("KDOQI") Chronic Kidney Disease ("CKD").
With roughly 26 million Americans currently suffering from CKD,
we expect this initiative from Quest Diagnostics to be a strategic
fit and improve the company’s specialized testing business.
Chronic Kidney Disease is a state of gradual loss of kidney
function. Recently, CKD has become more prevalent in young
adults due to the increasing problem of obesity, which leads to
diabetes and hypertension (high blood pressure).
According to Quest Diagnostics, awareness among patients about
CKD is vital because early detection is essential before the
kidneys stops working. This way, with the help of proper detection
through laboratory tests, one can avoid the extreme aftermaths like
dialysis or kidney transplant.
The updated guideline by National Kidney Foundation broadened
the CKD classification system with the inclusion of albuminuria,
protein in the urine, and glomerular filtration rate ("GFR") stage.
According to Quest Diagnostics, these modifications will be helpful
in detecting a patient's condition.
Despite the current challenging environment, we appreciate Quest
Diagnostics’ commitment toward improving the specialized testing
business.Quest Diagnostics has been focusing on areas with high
potential such as gene-based esoteric testing for cancer,
cardiovascular disease, infectious disease and neurological
disorders.
The company has experienced increasing demand for gene-based and
esoteric tests compared with routine tests on the back of increased
esoteric mix contributed by Athena and Celera.
As a part of this strategy, Quest Diagnostics recently shed its
OralDNA Labs salivary-diagnostics business and HemoCue diagnostic
products business. This would enable the company to refocus its
attention on its core diagnostic information services. In the
recent past, Quest developed a number of gene-based and esoteric
tests.
We also believe that the acquisition of UMass Medical Lab is in
sync with its goal to create a planned 'lab of the future,' which
will help it increase long-term growth opportunities in the rapidly
growing esoteric markets. We assume all these endeavors could very
well turn around the company’s fortunes going ahead.
However, Quest Diagnostics continues to witness challenges with
testing volume. Concerns also remain about a conservative 2013
revenue outlook, indicating that the industry trend will not
improve in the near future. Moreover, reimbursement pressure from
government and other payers continue. Concerns linger regarding the
reimbursement cut effective from Jan 1, 2013.
The stock currently carries a Zacks Rank #3 (Hold). However,
other medical device stocks worth a look are Given
Imaging (GIVN), Medical Action Industries
Inc. (MDCI) and Cytokinetics
Incorporated (CYTK). All these stocks carry a Zacks Rank
#1 (Strong Buy).
CYTOKINETCS INC (CYTK): Free Stock Analysis Report
QUEST DIAGNOSTC (DGX): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
MEDICAL ACTION (MDCI): Free Stock Analysis Report
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