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LabCorp to Grow in Precision Med with Cancer Diagnostics Lab


Laboratory Corporation of Americas Holdings LH, popularly known as LabCorp, has taken major steps to strengthen its foothold in the hugely growing cancer diagnostics space. This life sciences company’s Covance drug development business has recently opened a companion diagnostics laboratory in Morrisville, North Carolina to expand capabilities in precision medicine field.

Being quite a familiar term these days, precision medicine considers individual genes, environment and lifestyle for treatment and prevention of diseases (According to the National Institutes of Health — NIH).

Per the company, this cutting edge treatment option has a huge scope for improved patient outcome, particularly with targeted therapies and immunotherapies for treatment of cancer. Also, it has scopes in other therapeutic areas and rare diseases.

Companion diagnostics in combination with targeted drugs and therapies help to categorize patients who may or may not benefit from a specific treatment regimen.

The latest development successfully combines Covance’s advanced companion diagnostics capabilities and end-to-end drug development with commercialization capabilities of LabCorp.

Market Prospects

With cancer and other rare diseases spreading like endemics, the huge opportunities for players in this market are clearly visible. Per the latest Global Market Insights report, precision medicine market size was more than $39 billion in 2015, and is projected to grow at a CAGR of 10.5% from 2016 to 2023.

On the other hand, per the Markets and Markets report, the global cancer diagnostics market is expected to reach a worth $13.1 billion by 2020 at a CAGR of 12.9% during 2015-2020. Both these data indicate toward bountiful opportunity that LabCorp may grip through the latest development.

What Others Are Doing

LabCorp’s direct competitor and a leading companion diagnostic player Quest Diagnostics is also working on the same line. Earlier this week, the company appeared in headlines with the purchase of two laboratories in order to form a precision oncology center in Texas. This center of excellence will provide diagnostic services to detect and manage cancer for oncologists and patients all over the country.

Price Performance

For major part of the last three months, LabCorp traded below the Zacks categorized Medical – Dental Supplies industry. The company has lost 2.2% in this period, compared with the 7.4% gain of the broader industry. The latest favorable development is expected to provide a slight impetus to the company to rebound the stock price.

Zacks Rank & Key Picks

LabCorp currently bears a Zacks Rank #4 (Sell). Few better-ranked medical stocks are Align Technology, Inc. ALGN, Inogen, Inc. INGN and Accelerate Diagnostics, Inc. AXDX. Align Technology and Inogen sport a Zacks Rank #1 (Strong Buy), while Accelerate Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has an expected long-term adjusted earnings growth of almost 24.1%. The stock has roughly added 30.9% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of around 88%.

Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock has approximately added 20% over the last three months.

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