Leading diagnostics player Quest Diagnostics (DGX) is dissatisfied with the outcome of a nationwide study that it had carried out along with the Colon Cancer Alliance. The data demonstrated that one in three of men and women aged 60-70 have been screened for colon cancer only once.
However, the medical guidelines suggest periodic testing after initial screening at age 50 by colonoscopy and other methods. Recommended screening tests include colonoscopy (every 10 years), flexible sigmoidoscopy or virtual colonoscopy (every five years), and fecal occult blood (FOBT) and fecal immunochemical (FIT) tests (annually).
Screening at regular intervals is significant as colon cancer is the second leading cause of cancer death in the US. However, it is often treatable when detected in early stages. According to the US Centers for Disease Control & Prevention, 60% of colon cancer deaths could be prevented if people were screened as indicated by guidelines.
In March 2011, Quest Diagnostics received approval for its ColoVantage test from New York State's Department of Health for testing samples of patients. This will prove to be a more convenient option for patients aged 50 years or more who resist detection of colorectal cancer using the recommended screening methods.
It has been observed that ColoVantage could identify colorectal cancer in 70% of the patients. Moreover, it correctly detected the absence of colorectal cancer in about 89% of samples tested. This test could prove beneficial to huge patient population as colorectal cancer is the third most common cancer in men and women in the US.
Recommendation
We appreciate Quest’s initiative to repurchase shares and pay dividends to drive shareholder value. Besides, the company is adopting strategies such as suitable acquisitions, increased sales force and targeting additional geographies to drive its top line.
We are encouraged by Quest’s strong portfolio of tests, many of which are gaining acceptance gradually. Based on favorable demographic trends and strong focus, Quest will continue to remain one of the leading players in the industry. However, the company faces competition from Laboratory Corporation of America Holdings (LH).
We are currently Neutral on the stock which also corresponds to the Zacks #3 Rank (Hold) in the short-term.
QUEST DIAGNOSTC (DGX): Free Stock Analysis Report
Be the first to comment