Analyst: Quest Diagnostics Stock Has a Tough Road Ahead

The majority of analysts were already pessimistic, coming into today

Deputy Editor
Feb 23, 2022 at 10:10 AM
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Quest Diagnostics Inc (NYSE:DGX) stock is flat this morning, last seen 0.1% higher to trade at $130.71, after UBS downgraded the medical lab operator's shares to "neutral" from "buy." The firm cited uncertainty around the future path of Covid-19, which will weigh on the company's ability to hit its earnings target for fiscal 2023, as well as rising costs.

Analysts were already mostly bearish toward Quest Diagnostics stock, though there's still ample room for additional brokerages to change their tune. This is per the five of 12 in coverage that still recommended a "strong buy" coming into today. Meanwhile, the stock's 12-month consensus price target of $156.40 is a 19.8% premium to last night's close.

There is a clear preference for calls in the options pits, and a shift in sentiment could provide headwinds. DGX sports a 50-day call/put volume ratio of 3.10 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 84% of readings from the last year, suggesting a much healthier appetite for long calls than what is typically seen.

It's worth noting the equity's Schaeffer's Volatility Scorecard (SVS) stands at 89 out of 100, meaning Quest Diagnostics stock has exceeded option traders' volatility expectations during the past year.

DGX closed out 2021 by scoring an all-time high of $174.16 on the last session of the year. Things quickly took a turn for the worse, with a Jan. 12 bear gap sending the equity below the previously supportive 120-day moving average. Now middling around the $128 area for the first time since June 2021, Quest Diagnostics stock is off more than 25% in 2022.


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