On Friday, Baird raised the price target for Quest Diagnostics (NYSE:DGX) shares to $153 from $145, maintaining a Neutral rating but with a positive outlook.
The adjustment reflects a standard review process and the inclusion of the Allina model, which contributed an $8 increase to the target. Additionally, the recent announcement of a new deal with LifeLabs on July 3 has been positively received, adding another $5 to the price target.
The firm's analyst highlighted the standard preview process, which naturally resulted in a $3 increase in the price target due to the normal roll forward activity. The integration of the Allina model into their valuation also played a role in the revised target. The Allina Health partnership, which was established to enhance laboratory services, has been factored into the new valuation.
The new partnership with LifeLabs, a leading Canadian laboratory services provider, is expected to be accretive over a three-year period. The deal has been met with a favorable response from the market, suggesting that its impact is already reflected in the current stock price.
Quest Diagnostics has not yet publicly responded to the updated price target. The company, known for its diagnostic testing, information, and services, continues to focus on strategic partnerships and deals to enhance its offerings and market position.
The updated price target by Baird reflects the firm's assessment of Quest Diagnostics' current market activities and financial outlook. The stock's performance and investor sentiment following these developments will be closely monitored by the market.
In other recent news, Quest Diagnostics has been making strategic acquisitions to enhance its services. The company has entered into definitive agreements to acquire Canada's LifeLabs for $985 million and select laboratory assets from Allina Health.
Additionally, Quest Diagnostics has finalized the acquisition of PathAI Diagnostics' laboratory assets. These acquisitions are expected to expand the accessibility of advanced laboratory services and leverage artificial intelligence in disease diagnosis.
Citi has maintained a neutral rating on Quest Diagnostics, forecasting potential margin improvements by 2024. The company has also announced a quarterly cash dividend of $0.75 per share, reflecting its commitment to shareholder value.
In leadership changes, Robert B. Carter, the current Executive Vice President and Chief Information Officer at FedEx Corporation (NYSE:FDX), has joined Quest Diagnostics' Board of Directors. Murali Balakumar has been appointed as Senior Vice President and Chief Information and Digital Officer.
A study conducted by Haystack Oncology, a subsidiary of Quest Diagnostics, suggests that circulating tumor DNA testing for minimal residual disease could potentially reduce health plan costs by up to 21% for stage II colorectal cancer patients. These are the recent developments in the company's operations.
InvestingPro Insights
In light of Baird's updated price target for Quest Diagnostics, real-time data and InvestingPro Tips offer additional context for investors. Quest Diagnostics has shown a commitment to shareholder value with aggressive share buybacks and a track record of raising its dividend for 12 consecutive years. Moreover, the company's stock has been trading near its 52-week high, showcasing investor confidence.
InvestingPro Data indicates a robust market capitalization of $15.65 billion, with a P/E ratio of 18.67, reflecting investor valuation of the company's earnings. Despite a slight revenue decline of 3.29% in the last twelve months as of Q1 2024, Quest Diagnostics maintains a solid gross profit margin of 33.08% and an operating income margin of 14.29%. Additionally, the company boasts a dividend yield of 2.13%, which, coupled with its dividend growth of 5.63%, illustrates its consistent return to shareholders.
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