Quest Diagnostics Inc (NYSE: DGX) announced Wednesday it had received an emergency use authorization from the Food and Drug Administration for a new laboratory technique that can help signficantly expand and speed up novel coronavirus (COVID-19) testing.

What Happened

The Fortune 500 clinical laboratory said in a statement that its new lab technique is related to the extraction of viral RNA from specimens and can also be used for pooled specimens. 

“We appreciate the collaboration of the FDA to bring this technique to several of our labs spanning the U.S. With more testing capacity, we expect to improve turnaround times for our customers and patients,” said Steve Rusckowski, CEO of Quest.

The New Jersey-based lab says it can perform 135,000 COVID-19 molecular diagnostic tests a day at present. It claims the new method will add an additional 35,000 tests over the next several weeks. Including specimen pooling, it expects to be able to conduct more than 185,000 tests a day.

Quest said the latest EUA will also help speed up the time of getting back the test results in the coming weeks, with an turnaround time of one day for “Priority 1” patients, and two to three days for all other patients.

Why It Matters

Earlier this month, Quest’s SARS-CoV-2 rRT-PCR test became FDA approved for pooled testing, the first such test to receive the agency’s clearance.

3M Co (NYSE: MMM) is also working in collaboration with the Massachusetts Institute of Technology researchers on a rapid coronavirus test.

KeyBanc Capitals Markets analyst Donald Hooker upgraded Quest from Sector Weight to Overweight with a price target of $144, earlier on Wednesday.

The analyst expects the demand for COVID-19 testing to remain high through mid-2021.

KeyBanc revised earnings estimates for the lab for both 2020 and 2021 from $8.46 to $9 and from $8.83 to $9.10.

Price Action 

Quest shares closed nearly 2.2% higher at $126.20 on Wednesday and added another 1.8% in the after-hours trading.

© 2020 Benzinga does not provide investment advice. All rights reserved.

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