Quest Diagnostics (DGX) Stock Higher After Takeover Tweet Caused Spike

NEW YORK (TheStreet) -- Quest Diagnostics (DGX) shares are climbing 6.51% to $78.68 in afternoon trading on Friday, coming back down to earth after the stock spiked to intraday trading highs today following a tweet from a Twitter user saying that the company hired Goldman Sachs  (GS) after receiving a $95 per share bid.

Trading of Quest Diagnostics, diagnostic testing, information and service provider, shares were halted on the New York Stock Exchange this morning at 10:24 due to volatility as shares rose as high as $86 per share after Joe Kunkle, founder of OptionsHawk.com, tweeted that the company had hired Goldman Sachs to explore a sale. The tweet has since been deleted.

Quest has not commented on the rumors.

"I never actually said any of that. All I did was pass along what was said across the Internet on the market," Knuckle told Bloomberg earlier today.

"There are various chatrooms where this stuff gets passed around all day. It comes through instant messaging from unnamed sources. That's why it's labeled it as a rumor and unconfirmed," he said.

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 a few notable strengths, 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 solid stock price performance, revenue growth and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Compared to its closing price of one year ago, DGX's share price has jumped by 25.48%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DGX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.3%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 40.95% is the gross profit margin for QUEST DIAGNOSTICS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 3.31% is above that of the industry average.
  • QUEST DIAGNOSTICS INC's earnings per share declined by 40.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, QUEST DIAGNOSTICS INC reported lower earnings of $3.77 versus $5.34 in the prior year. This year, the market expects an improvement in earnings ($4.80 versus $3.77).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 41.3% when compared to the same quarter one year ago, falling from $104.00 million to $61.00 million.
  • You can view the full analysis from the report here: DGX Ratings Report

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