Deutsche Bank Offers Up a Pair Trade Idea on Quest Diagnostics and Laboratory Corp. of America

In a note published earlier today Deutsche Bank analyst, Darren Lehrich pulled the old "switcheroo" upgrading shares of Quest Diagnostics Inc. (NYSE: DGX) from Hold to Buy while downgraded shares of Laboratory Corp. of America Holdings (NYSE: LH) from Buy to Hold. Additionally, Lehrich adjusted the price targets up from $64 to $75 and down from $120 to $115, respectively.Lehrich commented, "At a time when we believe both of the biggest independent labs are at the cusp of returning to more predictably positive operating earnings growth in their core lab business, we are faced with the most basic question: which is the better one to own?"To this point, Lehrich noted he has long had a bias toward Laboratory Corp. due to its better organic growth potential and pure play profile. However, with the recent acquisition of Covance Inc. (NYSE: CVD), Lehrich believes the company will be less desirable to the pure play investors. Furthermore, he says, despite the potential for Covance to be "quite accretive" by 2015, revenue synergies are hard to envision.As for Quest Diagnostics, Lehrich is optimistic for the next several years of the company's "invigorate" initiative. He says his recent meetings with company management has left him confident the next several years of invigorate savings should generate more operating profit growth and margins than the past several years.