Buy Rating Affirmed for Quest Diagnostics on Strong Earnings Visibility and Growth Prospects

Mizuho Securities analyst Ann Hynes reiterated a Buy rating on Quest Diagnostics (DGX – Research Report) yesterday and set a price target of $155.00.

Ann Hynes has given his Buy rating due to a combination of factors that indicate a positive outlook for Quest Diagnostics. The company’s earnings visibility is perceived as high, supported by a robust core testing environment and the potential for earnings to exceed current forecasts. This confidence is bolstered by Quest’s ability to hit its 2024 adjusted EPS target, driven by strong performance in its base diagnostics business, market share gains, favorable labor trends, and cost savings from its Invigorate program. Moreover, the optimism surrounding the Haystack acquisition suggests further growth potential for the company.
Furthermore, Quest Diagnostics’ base business resilience and margin expansion initiatives are on track, which Hynes finds promising. The guidance for margin expansion between 75 to 150 basis points through 2026, coupled with improving labor trends, positions the company well for increased profitability. The commercial pricing environment, no longer a structural headwind thanks to value-based incentive programs, is now seen as a tailwind, contributing to the positive assessment. The analyst maintains a $155 price target, noting that the stock’s flat performance year-to-date, compared to the broader market, presents an opportunity for outperformance given these favorable factors.

Based on the recent corporate insider activity of 71 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DGX in relation to earlier this year.

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Quest Diagnostics (DGX) Company Description:

Quest Diagnostics, Inc. engages in the provision fo diagnostic testing, information and services. It operates through the Diagnostic Information Services (DIS) and All Other segments. The DIS segment offers diagnostic information services to patients, clinicians, hospitals, health plans, and employers. The All Other segment consists of risk assessment services, healthcare information technology, diagnostic products, and clinical trials testing businesses. The company was founded in 1967 and is headquartered in Secaucus, NJ.