Morgan Stanley Upgrades Quest Diagnostics (DGX) to Overweight; to Benefit from Shifts to Phase II of COVID-19 Testing

(Updated - April 28, 2020 9:09 AM EDT)

(updated to add analyst comments)

Morgan Stanley analyst Ricky Goldwasser upgraded Quest Diagnostics (NYSE: DGX) from Equalweight to Overweight with a price target of $139.00 (from $95.00), saying it is positioned to meaningfully benefit from market shifts to phase II of COVID-19 testing.

The analyst commented, "We downgraded DGX shares on 3/27 as we thought COVID-19 testing was not enough to offset headwinds associated with the decline in physician office visits. Since then, we have done more work and re-evaluated the potential opportunity. We are raising our 2021 estimates above our pre COVID-19 forecasts, as the company is positioned to benefit from the broadening of testing guidelines and new market opportunities .Longer term we continue to see opportunities for Quest to gain share at the expense of regional labs. Accordingly, we are upgrading shares to OW and raising our price target to $139."

The analyst said their analysis suggests that the COVID-19 diagnostic testing opportunity may be two times higher when considering adding testing as part of pre elective procedure routine. COVID-19 diagnostics could translate to ~$689 million revenue opportunity and $372 million in EBIT through 2021, it was added.

For an analyst ratings summary and ratings history on Quest Diagnostics click here. For more ratings news on Quest Diagnostics click here.

Shares of Quest Diagnostics closed at $116.02 yesterday.

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