Surging COVID-19 Test Volume Pushes DGX Higher

The equity is up over 20% year-over-year

Fernanda Horner
Jul 28, 2020 at 10:49 AM
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The shares of Quest Diagnostics Inc (NYSE: DGX) are up 1% at $125.37 this morning, after the clinical laboratory concern said COVID-19 testing capacity has slightly exceeded demand for the first time since June. The company also said it surpassed 9.2 million coronavirus tests results delivered to date, and that it is now working on increasing capacity to 150,000 tests a day by next week. As capacity continues to grow, Quest hopes to return result turnaround times to one to three days, as opposed to the current two to seven days. 

Quest Diagnostics stock has completely recovered from its late-March lows near the $73 level. In fact, a recent bounce off support at the 100-day moving average sent the security to an all-time-high of $131.81 on July 23. And while the equity did just slip below its formerly supportive 10-day moving average, it still  sports a 22% lead year-over-year. 

Analysts are split on the equity, with eight of the 14 in coverage sporting a "buy" or better, while the remaining six called it a tepid "hold." Meanwhile, the stock's 12-month consensus price target of $136.86 is a 9% premium to current levels.

In the options pits, however, there is a clear preference for calls. DGX sports a 50-day call/put volume ratio of 13.41 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 96% of readings from the last year, suggesting a much healthier appetite for calls than what is typically seen.  


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