On Wednesday, Quest Diagnostics (NYSE:DGX) received an upgrade in its stock rating by a Jefferies analyst from Hold to Buy. Accompanying the rating change, the price target for the company's stock was also raised to $155.00, up from the previous target of $140.00.
The upgrade was based on the analyst's confidence that the management's fiscal year 2024 guidance is cautious, which could lead to better-than-expected performance. The current market valuation of Quest Diagnostics, according to the analyst, seems to factor in a degree of investor skepticism.
The analyst noted that not only is organic volume growth expected to be strong, but mergers and acquisitions are also anticipated to bolster earnings per share (EPS) this year. Looking ahead, the analyst predicts that EPS growth will stabilize to a high single-digit percentage beginning in 2025.
As Quest Diagnostics continues to meet or exceed its EPS targets, the analyst expects the company's stock multiple to return to its historical average. This sentiment reflects a positive outlook for the company's financial performance and stock market valuation moving forward.
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