Jefferies Cuts Price Target on Bio-Reference Labs (BRLI), Sees No Catalysts Until Macro Concerns Clear

Jefferies is maintaining its Hold rating on shares of Bio-Reference Laboratories (NASDAQ: BRLI) and is lowering its price target slightly from $23 to $21 as it sees no major catalysts in the near-term.

The company reported strong third quarter results with 20 percent volume growth and solid organic growth. The firm notes that the growth was due to new test offerings and market share gains, specifically in BRLI's Women's Health Program, its Cardiac Genetics Program,and its Cancer Microarray Program.

Currently, BRLI generates ~25 percent of its revenue from Medicare, of which 40 percent is susceptible to a co-pay or a 2 percent trigger cut. Jefferies calculates that a 20 percent co-pay would be a ~$0.05 hit to annualized earnings, while a 2 percent trigger cut would be a ~$0.03 hit.

An analyst at Jefferies comments, "Macroeconomic concerns along with fears of deficit cuts to entitlement programs are keeping investors out of equities, particularly microcap stocks that are perceived as higher risk. Barring a takeout of the company, which we don't expect near-term, we think the stock remains range bound."

Jefferies is maintaining its fourth quarter and fiscal 2011 EPS estimates of $0.37 and $1.15 and is raising its fiscal 2012 estimate by $0.03 to $1.37. The firm also increased its revenue estimates for the two fiscal years slightly to $559.4 million and $643.5 million.

For more ratings news on Bio-Reference Laboratories click here and for the rating history of Bio-Reference Laboratories click here.

Shares of Bio-Reference Laboratories closed at $18.66 yesterday.

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