Back to top

Analyst Blog

Zacks Equity Research

Quest Sells HemoCue for $300 Mil

DGX LH

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Quest Diagnostics (DGX - Analyst Report), recently announced that Radiometer Medical ApS has agreed to purchase the HemoCue diagnostic products business for $300 million plus customary adjustments for cash balances. This leading diagnostic testing company had earlier disclosed its plans to sell off the particular business.

HemoCue develops point-of-care testing systems like hemoglobin, glucose and others worldwide. The company believes that, in addition to its earlier divestment of OralDNA Labs salivary-diagnostics business to Access Genetics, the latest divesture of HemoCue will allow it to refocus resources toward core diagnostic information services, drive operational excellence and restore growth.

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 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.

Earlier in Dec 2012, as a part of this strategy, the company shed OralDNA Labs salivary-diagnostics business in order to refocus its resources to core diagnostic information services. Recently, Quest developed a number of gene-based and esoteric tests, made strategic acquisitions and entered into partnerships to further strengthen its foothold in this segment.

Although we remain concerned with Quest Diagnostics’ overall sales disruption in the recent past, we are optimistic regarding the company’s strategy to refocus on Diagnostic Information Services along with the organizational structure developed by the company’s new CEO, Steve Rusckowski. We also expect this to run successfully adding synergies to its ongoing $500 million restructuring initiative, associated with its Invigorate program.

We remain concerned about Quest Diagnostics as it is continuously witnessing 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, which has been in effect from Jan 1, 2013.  The competitive landscape is also tough with the presence of Laboratory Corporation of America Holdings (LH - Analyst Report).

Other Stocks to Consider

Quest Diagnostics retains a Zacks Rank #5 (Strong Sell). While we strongly recommend a ‘Sell’ rating for the stock, other medical device stocks worth a look are Medical Action Industries Inc. , and Given Imaging Ltd. . Both the stocks carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
LAKE SHORE G LSG 0.77 +6.05%
SKECHERS USA SKX 38.53 +4.50%
QUESTCOR PHA QCOR 80.07 +2.47%
VIPSHOP HOLD VIPS 156.35 +1.82%
ENLINK MIDS ENLC 36.29 +1.60%