Piper Jaffray Neutral on Quest Diagnostics
Piper Jaffray is out with a research report on Quest Diagnostics (NYSE: DGX) and it has a Neutral rating and a $55 price target on shares.
In a note to clients, Piper Jaffray writes, "We are lowering our DGX estimates due to potentially lower than anticipated volume growth due to continued 1) market share erosion in various testing segments such as women's health, 2) weak drugs of abuse testing, and 3) pressure on anatomic pathology (AP) testing. While DGX's testing volume has been weak and DGX is reducing operating costs by $500 million, we believe the magnitude of the cost cuts indicates the operating environment is challenging and the weak (negative) organic growth will lead to margin deterioration. Given DGX's attractive free cash flow yield of ~11%, we believe there is downside valuation support which is why we remain on the sidelines at Neutral."
Shares of DGX closed at $47.79 yesterday.
