Tuesday, Quest Diagnostics (NYSE:DGX) saw its stock price target increased by Evercore ISI from $140.00 to $145.00 while the firm maintained an In Line rating on the stock. The adjustment comes after the company reported its most impressive quarter since the decline of COVID-19. Quest Diagnostics' stock has risen approximately 4% following the announcement of their quarterly results.
The company's core business has shown robust performance, with a roughly 6% increase from its base business, gains in market share, and enhanced strength in consumer and advanced testing. This broad-based growth has contributed to revenues exceeding expectations and has also positively impacted profit margins, aided by improved selling, general, and administrative (SG&A) cost efficiencies.
The strong performance in the first quarter and a guidance for the year that is not considered aggressive have set a new performance baseline for Quest Diagnostics. This is expected to bolster confidence in the company's long-term guidance and support a higher valuation in the post-COVID landscape.
In response to these developments, Evercore ISI has revised its 2024 earnings per share (EPS) estimate for Quest Diagnostics upward by 13 cents to $8.83.
The new stock price target of $145 is based on a valuation of 11 times the company's projected 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) and 16.5 times its price-to-earnings (P/E) ratio. These metrics reflect the firm's view of Quest Diagnostics' financial health and potential for growth in the coming period.
Quest Diagnostics has demonstrated resilience and adaptability in navigating the challenges posed by the pandemic, and its recent performance indicates a strong foundation for future growth. The updated price target and sustained In Line rating signify a positive outlook for the company's stock as it continues to capitalize on its core business and strategic initiatives.
InvestingPro Insights
Quest Diagnostics (NYSE:DGX) has not only caught the eye of Evercore ISI but also displays several strengths according to InvestingPro metrics and tips. With a market capitalization of $15.18 billion and a solid P/E ratio of 16.79, the company stands as a stable investment.
Analysts have noted that Quest Diagnostics has been profitably navigating the post-COVID environment, which is reflected in its last twelve months' revenue of $9.252 billion and a gross profit margin of 33.17%.
InvestingPro Tips highlight that management's confidence is demonstrated through aggressive share buybacks and a consistent increase in dividend payouts, raising it for the last 12 consecutive years. Moreover, the company has maintained dividend payments for 21 consecutive years, underscoring its financial stability and commitment to shareholder returns.
With analysts predicting profitability for the current year and considering the company's track record over the last twelve months, investors might find reassurance in these indicators of enduring performance.
For those seeking to delve deeper into Quest Diagnostics' potential, InvestingPro offers additional tips and insights. In fact, there are 5 more InvestingPro Tips available for DGX, which can be accessed by visiting: https://www.investing.com/pro/DGX. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which could further inform your investment decisions.
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