UPDATE: Stifel Nicolaus Downgrades VCA Antech to Sell on Long-Term Lab Headwinds
Stifel Nicolaus downgraded VCA Antech (NASDAQ: WOOF) from Hold to Sell.
Stifel Nicolaus noted, "Our work uncovers what we believe are long-term systemic issues at the high margin lab business (estimated 35%-40% of total company operating profit) which may result in continued market share losses. With VCA trading at the upper end of its three-year NTM P/E range, we believe the stock's performance will lag going forward. … While some of VCA's long-term lab challenges have been well vetted (no lab/point-of-care ("POC") bundle, lack of specialty tests, etc.), our work uncovers a potentially more troubling headwind. We believe VCA's animal hospital presence is alienating other veterinary practices from using VCA's high margin reference lab. This issue is likely to continue (if not worsen) as VCA continues to build out its hospital network."
VCA Antech closed at $21.95 on Friday.
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