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With a market cap of $18.3 billion, Secaucus, New Jersey-based Quest Diagnostics Incorporated (DGX) is a leading provider of diagnostic testing and services globally. It offers a wide range of clinical testing and healthcare IT solutions through its extensive network of laboratories and service centers.
Shares of the medical laboratory operator have underperformed the broader market over the past 52 weeks. DGX has risen 19.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31.3%. In 2024, DGX stock surged 17.8%, compared to SPX's 25.5% YTD gain.
However, DGX stock has outperformed the Health Care Select Sector SPDR Fund's (XLV) 10.9% rise over the past 52 weeks and a 6.6% increase on a YTD basis.
Shares of Quest Diagnostics climbed 6.9% on Oct. 22 due to its stronger-than-expected Q3 2024 adjusted EPS of $2.30 and revenue of $2.5 billion. Diagnostic Information Services revenues rose 8.9% to $2.4 billion, driven by a 5.5% increase in requisition volumes and a 3.3% rise in revenue per requisition. The company also updated its 2024 guidance, raising full-year revenue expectations to $9.80 billion - $9.85 billion and affirming its adjusted EPS range of $8.85 - $8.95.
For the current fiscal year, ending in December, analysts expect DGX's EPS to grow 2.2% year-over-year to $8.90. The company's earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 16 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings and nine “Holds.”
This configuration is slightly more bullish than three months ago, with six “Strong Buy” ratings on the stock.
On Oct. 23, Citi analyst Patrick Donnelly raised Quest Diagnostics' price target to $185, citing the integration of LifeLabs, elevated utilization trends, and the company's defensive positioning during an election cycle.
As of writing, DGX is trading below the mean price target of $171.50. The Street-high price target of $215, implies a modest potential upside of 32.4% from the current price levels.
