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Investing.com - Baird downgraded Quest Diagnostics (NYSE:DGX) from Outperform to Neutral on Monday, while maintaining a price target of $194.00. The stock, currently trading at $180.23, sits near its 52-week high of $185.62, with a market capitalization of $20.15 billion. According to InvestingPro data, the company trades at a P/E ratio of 21.25x.
The research firm cited a balanced risk/reward profile as the primary reason for the rating change, noting that objective analysis suggests insufficient upside potential to maintain a positive outlook on the stock. This aligns with InvestingPro’s Fair Value assessment, which indicates the stock is currently overvalued. The company maintains strong fundamentals, with a 12.58% revenue growth and has raised its dividend for 14 consecutive years, currently yielding 1.78%.
Baird maintained its Outperform rating on Laboratory Corporation of America (NYSE:LH), creating a split recommendation between the two diagnostic testing companies.
The downgrade comes despite Baird’s acknowledgment of positive industry trends in the diagnostic testing space and strong market sentiment, even in the face of potential risks from the Protecting Access to Medicare Act (PAMA).
Baird described the decision as a "50/50 call," suggesting the firm could have maintained ratings on both companies but ultimately decided Quest’s current valuation warranted the more cautious stance.
In other recent news, Quest Diagnostics reported strong financial results for the second quarter of 2025, surpassing analysts’ expectations. The company achieved an adjusted earnings per share of $2.62, exceeding the projected $2.57. Additionally, Quest Diagnostics reported revenue of $2.76 billion, which was above the anticipated $2.73 billion. These results highlight the company’s financial performance during the period.
In another development, Quest Diagnostics subsidiary Haystack Oncology announced a collaboration with Mass General Brigham. The partnership aims to study the use of liquid biopsy technology in cancer treatment, specifically focusing on cutaneous squamous cell carcinoma and HPV-independent head and neck squamous cell carcinoma. Researchers will evaluate the Haystack MRD test for detecting minimal residual disease after treatment. These recent developments reflect Quest Diagnostics’ ongoing initiatives in both financial performance and medical research.
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