UBS Lowers Price Target and Estimates on Quest Diagnostics (Updated)

Update (9:40 a.m.): Updated with Friday market open information.

NEW YORK (TheStreet) -- UBS lowered its price target on Quest Diagnostics  (DGX) to $56 and also lowered its estimates. The firm expects that sequestration and weather will affect the company's first quarter. UBS set a "neutral" rating.

The stock was falling 0.69% to $52.02 shortly after the market opened on Friday.

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Separately, TheStreet Ratings team rates QUEST DIAGNOSTICS INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate QUEST DIAGNOSTICS INC (DGX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income, notable return on equity, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • QUEST DIAGNOSTICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, QUEST DIAGNOSTICS INC increased its bottom line by earning $3.85 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($3.90 versus $3.85).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 148.4% when compared to the same quarter one year prior, rising from $163.08 million to $405.14 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, QUEST DIAGNOSTICS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • 42.44% is the gross profit margin for QUEST DIAGNOSTICS INC which we consider to be strong. Regardless of DGX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DGX's net profit margin of 22.66% significantly outperformed against the industry.
  • The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: DGX Ratings Report

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