Deutsche Bank Raises PTs on Clinical Labs (LH) (DGX) to Reflect SGR Deal

Deutsche Bank maintained a Buy rating on Laboratory Corporation of America (NYSE: LH) and raised its price target to $114.00 (from $105.00). Hold-rated Quest Diagnostics' (NYSE: DGX) price target was raised to $64 (from $59). The change is tied to anticipated passage of the 'SGR patch."

Analyst Darren Lehrich said, "With the imminent passage of the 1-yr Medicare physician pmt legislation (socalled "SGR patch"), we are officially revisiting the Medicare pricing assumptions in our 2015 models for DGX and LH. We are also making some additional adjustments to 2014 ests to reflect a slightly more favorable view for incremental resolution to the molecular pathology pmt denial issues that carried-over from 2013."

"The changes to 2014-2015 are accompanied by adjustments to our DCF in out years to reflect a more moderate CMS regime when the clinical lab fee schedule (CLFS) cuts begin in 2017. Collectively, the above leads us to revise PTs: DGX to $64 ($59) and LH to $114 ($105)," added the analyst.

For an analyst ratings summary and ratings history on Laboratory Corporation of America click here. For more ratings news on Laboratory Corporation of America click here.

Shares of Laboratory Corporation of America closed at $98.21 yesterday.

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