Quest Diagnostics: UBS Keeps Neutral Rating, Lowers PT to $175 from $176

Quest Diagnostics: UBS Keeps Neutral Rating, Lowers PT to $175 from $176

UBS has slightly adjusted its price target for Quest Diagnostics (DGX) from $176 to $175, while maintaining a Neutral rating on the stock. This minor downward revision reflects a cautious approach by the firm as it evaluates the company's market position and future prospects [1].

Analysts' Forecasts
Based on the one-year price targets from 16 analysts, the average target price for Quest Diagnostics Inc (DGX) is $184.61, with a high estimate of $200.00 and a low estimate of $158.69. This average target implies an upside of 9.77% from the current price of $168.18 [1].

The consensus recommendation from 20 brokerage firms is currently 2.2, indicating an "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies a Strong Buy and 5 denotes a Sell [1].

GuruFocus estimates the GF Value for Quest Diagnostics Inc (DGX) in one year at $164.26, suggesting a downside of 2.33% from the current price of $168.18. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at, calculated based on historical multiples, past business growth, and future performance estimates [1].

Recent Financial Performance
Quest Diagnostics reported strong revenue growth of approximately 12% in the first quarter, with nearly 2.5% in organic growth. The company's diagnostic information services revenue increased by 12.7% compared to the prior year. Total volume growth was up 12.4% versus the first quarter of 2024, while organic volume change was down 0.9% [1].

The company reaffirmed its full-year 2025 revenue and adjusted EPS guidance, indicating confidence in its financial outlook. The expected revenue for the full year 2025 is between $10.7 billion and $10.85 billion, with adjusted EPS expected to be in the range of $9.55 to $9.80 [1].

Positive Points
Quest Diagnostics expanded its use of automation, robotics, and AI to improve quality, customer and employee experiences, and productivity. The company was named as the first independent national lab to be selected to the Optum Health Preferred Lab Network, enhancing its reputation and partnerships. Additionally, the company saw impressive uptake of its novel PFAS forever chemicals test, demonstrating successful innovation and market adoption [1].

Negative Points
Organic volume growth was down by 0.9%, impacted by weather and one less day in the quarter compared to the prior year. Higher interest expenses impacted EPS in the first quarter, with reported EPS at $1.94 compared to $1.72 a year ago. The company faces potential challenges from tariffs, although it believes the impact is manageable under current regulations. Ongoing labor strikes at LifeLabs in British Columbia could impact operations and financial performance. Quest Diagnostics continues to face challenges in the health system pricing landscape, which remains the most difficult area to manage [1].

References:
[1] https://www.gurufocus.com/news/2987499/quest-diagnostics-dgx-faces-slight-price-target-adjustment-by-ubs-dgx-stock-news