LabCorp shares tumble 4.6% after analyst downgrades stock
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Local Tech Wire
NEW YORK - A Credit Suisse analyst downgraded shares of medical laboratory operators Quest Diagnostics Inc. and Laboratory Corp. of America Holdings (NYSE: LH) Wednesday, predicting slower growth and smaller profits in 2010.
Shares in LabCorp, which is based in Burlington, N.C., fell 4.6 percent or $3.16 to close at $65.27 Wednesday.
Analyst Ralph Giacobe downgraded the two stocks to "Neutral" from "Outperform," and said slowing profit growth could push the lab operators to make a large international acquisition in the next year or 18 months. He lowered his price target on Quest shares to $57 from $64, and his target on LabCorp to $71 per share from $78.
Giacobe said the companies may get lower prices for their services next year, as he expects a cut in Medicare payment rates and potentially weaker prices from health insurers. He added that health care reform could lead to further rate cuts.
The analyst lowered his 2010 profit estimate for Quest to $4.23 per share from $4.29 per share, and now expects a profit of $5.27 for LabCorp, down from $5.37. On average, Thomson Reuters says analysts expect $4.13 and $5.39 per share.
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