Cantor Fitzgerald analyst Bryan Brokmeier believes Veracyte's (VCYT) agreement with Quest Diagnostics (DGX) for its Afirma Gene Expression Classifier expands access which, in addition to accelerating growth, should improve reimbursement rate and margins. Other diagnostic partners have said that Quest has become more of a driver of sales of proprietary tests, particularly for higher value tests, which leaves Brokmeier encouraged that the partnership will pay off for Veracyte, he tells investors. The analyst reiterates an Overweight rating and $13 price target on Veracyte shares following the news.

UBS raised the firm's price target on Quest Diagnostics to $146 from $139 and keeps a Neutral rating on the shares. UBS is more confident that Quest can hit its margin expansion story following the Q2 print and the firm's call with management, the analyst tells investors in a research note. Labor cost trends seem to have already peaked and Covid revenues should no longer be a headwind starting 2H, while above market base volume growth continues, the firm notes.

Citi raised the firm's price target on Quest Diagnostics to $145 from $135 and keeps a Neutral rating on the shares post the Q1 report. The company increased the midpoint of its fiscal 2024 revenue target and management anticipates the rest of fiscal year to follow regular seasonality on a revenue and margin basis with a step-up into Q2, the analyst tells investors in a research note.

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