Market View

U.S. Market
The U.S. market remains in a Confirmed Uptrend. Indices are consolidating strong gains off their respective 50-
DMA. Support is at the rising 10-DMA (S&P 500: 3,459; Nasdaq: 11,580). The distribution day count is seven
and four on the S&P 500 and the Nasdaq, respectively, with two days expiring on each index next week.

NeoGenomics

Key points from this report:

 

  • Buy NeoGenomics (NEO). The stock is actionable as it builds the right side of a 10-week cup with a pivot of $41.03.
  • Oncology testing recovery. NeoGenomics is expected to report triple-digit earnings growth in 2021, driven by a rapid and strong recovery in core oncology testing volume. COVID-19 testing should result in an incremental revenue and earnings opportunity.
  • Liquid biopsy opportunity. Liquid biopsy remains another strong growth engine for the company. On June 29, NeoGenomics launched three liquid biopsy tests with a turnaround time of just seven days or less.
  • Margin expansion. Driven by a 30%+ test volume CAGR, NeoGenomics has reduced its cost per test 41% since 2011. Consequently, its gross margin expanded to 48.1% in 2019 from 44.7% in 2011.
  • Pharma business. The restarting of clinical trials and patient enrollment with no significant cancellation will improve the outlook for their pharma services business. Management expects the pharma service business to grow 20%+ over the long term.

Market View

U.S. Market
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are building the right side of a
consolidation after breaking above short-term resistance (S&P 500: 3,430, Nasdaq: 11,400). The distribution
day count remains elevated at seven and five, respectively, but two days will expire on the S&P 500 and one on
the Nasdaq next week.

Dr. Lal PathLabs

Key points from this report:

 

  • Buy Dr. Lal PathLabs: The stock broke out of a 10-week flat base on 9x average daily volume.
  • Positive read-through: Dr. Lal PathLabs’ competitors Metropolis Healthcare (MEP.IN) and Thyrocare Technologies (ZTY.IN) announced positive business updates for the quarter ending September. Their ex-COVID businesses have normalized in September versus last year, as easing lockdown restrictions aided in a better-than-expected business recovery.
  • Better positioning among peers: The company is the largest branded diagnostic chain in India in terms of samples processed. In FY20, the company processed 47.7M (+14% y/y) samples from 19.4M (+10% y/y) patients, compared with its nearest competitor, SRL Diagnostic (owned by Fortis Healthcare (FTH.IN)), at 30M samples. Over the last four quarters, the number of samples processed by the company has increased 14.5% on average.

Market View

U.S. Market
The U.S. market has shifted back to a Confirmed Uptrend. The status change was made after Thursday’s close
as both indices regained their respective 50-DMA, a multitude of quality growth ideas turned actionable, and
distribution was avoided for seven straight sessions ahead of a period where multiple days will begin to expire.
On Friday, indices pulled back to their respective 50-DMA, though little damage was done to leading stocks
given sizable gains earlier in the week. The S&P 500 added an eighth distribution day, though four will expire
over the next eight sessions. The Nasdaq’s count went unchanged at five total, with two set to expire over that
same time frame.

PerkinElmer

Key points from this report:

 

  • Buy PerkinElmer (PKI). The stock is actionable after breaking out from a seven-week flat base in heavy volume. Add to positions.
  • PerkinElmer has a top three market position in 65–70% of its product lines. Driven by increasing diagnostic revenue, recurring revenue now accounts for 75% of total revenue, up from 55% in 2014.
  • The company is now the global leader in biochemical prenatal testing, newborn screening, and global autoimmune in vitro diagnostics. Through this improving product mix as well as geographic expansion, the company has tripled its TAM to ~$50B.

Market View

U.S. Market
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq closed the week on a strong
note, rallying sharply off price support and now set to face resistance at their respective 50-DMA (S&P 500:

3,351; Nasdaq: 11,025). Distribution remains elevated at seven and six days, respectively, with one day expir-
ing on the Nasdaq next Wednesday.