LabCorp (LH) said that the U.S. Food and Drug Administration (FDA) on Friday granted its diagnostic antibody test emergency use for anyone whether they have COVID-19 symptoms or not.
In addition, the FDA allowed LabCorp’s COVID-19 RT-PCR test to be used for pooled sample screening. The company’s matrixed pooled strategy for COVID-19 allows for larger groups of samples to be tested at one time. This methodology promises to quickly provide quality test results for individuals within the group, without requiring retesting in the majority of cases.
Pooled testing may be used for populations at low risk of COVID-19, when testing demand exceeds laboratory capacity, or when testing reagents are in short supply, the company said.
The FDA said it expanded the use of the test to anyone, after the company provided scientific data showing the test’s ability to detect SARS-CoV-2 in a general, asymptomatic population.
“FDA’s authorization of the first diagnostic test to be used for anyone, regardless of whether they are showing symptoms of COVID-19 or have other exposure risk factors, is a step toward the type of broad screening that may help enable the reopening of schools and workplaces,” said FDA Commissioner Stephen M. Hahn. “By authorizing another test for use with pooled samples, we also further help increase the possibility that patients may be able to receive results sooner,
The company’s matrixed pooled testing method involves testing up to five samples at once. If there is a positive sample in the pool, LabCorp can identify the individual positive sample in the pool using patterns detected by its robotic testing platform.
“Pooling methods test groups of individuals efficiently and with high quality, while increasing our overall testing capacity,” said Brian Caveney, chief medical officer of LabCorp Diagnostics. “The demand for testing continues to increase and we are committed to finding innovative solutions to ensure testing is available.”
Merrill Lynch analyst Derik De Bruin this month raised LabCorp’s rating to Buy from Neutral with a price target of $220, up from $194, saying that he is positive on prolonged COVID-19 testing tailwinds and the company’s key positioning in the U.S. clinical testing market.
While still facing limited visibility, de Bruin sees upside potential from elevated lab consolidation catalyzed by U.S. Medicare reimbursement cuts, retail clinic opportunities, monetization of lab data, and higher growth from the company’s contract research organization (CRO) business.
The rest of the Street is in line with De Bruin’s bullish outlook. The Strong Buy analyst consensus boasts 12 Buys versus 1 Hold. With shares up 17% so far this year, the $220.45 average price target indicates another 11% upside potential in the coming 12 months. (See LabCorp stock analysis on TipRanks)
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