Quest Diagnostics & Lab Corp Surging
Thanks for the upgrades, Goldman Sachs!
By Paul Price
Quest Diagnostics (DGX) was steadily climbing at midday after glowing reports from Goldman Sachs on the company and the industry. Goldman Sachs upped its rating on the company to "buy." Quest shares (+4.4%) gapped up then continued to surge throughout the morning session to an intra-day peak of $59.88.
Quest had been rated neutral before analyst Isaac Ro upgraded it and asserted that Quest's earnings should climb with the implementation of the health-care overhaul next year. He said he sees added benefits from new management, improvement in capital allocation, and scheduled royalties on a drug from Pharmacyclics Inc. (PCYC).
Ro also upped his rating on Laboratory Corp. of America Holdings (LH) from sell to neutral. LH was up +2.1%. "We think the Street is not yet modeling the impact of [health-care reform] and we believe pricing concerns are overblown. Near term, we believe [health-care reform] will be neutral to revenues but beneficial to bad debt. Long term, we believe [health-care reform] will drive share towards the low-cost providers," which includes Quest and Laboratory Corp., Ro wrote in his report.
Both of these stocks are in Market Shadows' Virtual Value Portfolio and our Virtual Put Selling Portfolio.
