UPDATE: UBS Upgrades Quest Diagnostics (DGX) to Buy
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UBS analyst Kevin Caliendo upgraded Quest Diagnostics (NYSE: DGX) from Neutral to Buy with a price target of $158.00 (from $135.00).
The analyst comments "We are upgrading shares of DGX to Buy from Neutral as we think Consensus underestimates the top-line potential for the base business beyond COVID (our 2022E/2023E revenue/EPS sits 2%/10% above Consensus, with Consensus implying LSD top-line growth in 2023E). Post-COVID, we think DGX top line growth is poised to accelerate to the MSDs (vs. a 1.5% avg. in the five years prior), which in our view supports multiple expansion. We believe underlying industry fundamentals are as healthy as they have been in 15 years with a stable outpatient reimbursement backdrop. We think any incremental PAMA pressure beyond 2022 would be manageable. Post COVID, DGX's balance sheet is only 1.7x levered, and the competitive backdrop suggests sustained momentum in Market Access Penetration, PLS, and M&A."
Shares of Quest Diagnostics closed at $132.71 yesterday.
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