Quest Diagnostics Inc. (DGX) provides diagnostics information services. The company recently announced a collaboration with Ginkgo Bioworks to provide K-12 school COVID-19 testing in Texas. DGX provides K-12 school testing in more than 20 states across the U.S.
Let’s look at Quest’s recent third-quarter Fiscal 2021 financials and understand what has changed in its key risk factors that investors should know.
Revenue during the quarter remained flat at $2.77 billion but surpassed analysts’ expectations by $259.5 million. Operating margin contracted to 23.5% from 25.8% a year ago. Consequently, earnings declined to $3.96 per share from $4.31 per share a year ago but exceeded the Street’s estimate by $0.90 per share.
The CEO and President of Quest, Steve Rusckowski, said, “In late summer we experienced some softness in the base business across the country, but saw an overall rebound in September. Importantly, our base business continued to improve sequentially in the third quarter which speaks to the ongoing recovery.” (See Insiders’ Hot Stocks on TipRanks)
Additionally, anticipating higher COVID-19 volumes and improvements in its base business, Quest has raised its outlook for Fiscal Year 2021. The company expects net revenue to land between $10.45 billion and $10.60 billion, as compared to the previous estimate of $9.84 billion and $10.09 billion.
Earnings per share are estimated to be in the range of $13.50 to $13.90 against the earlier guidance range of $11.65 per share to $12.35 per share.
On October 26, Wells Fargo analyst Dan Leonard reiterated a Hold rating on the stock but increased the price target to $150 from $140. Leonard believes short-term positives from COVID-19 test volumes will offset the broader challenges in the clinical lab industry.
Consensus on the Street is a Moderate Buy based on 5 Buys and 5 Holds. The average Quest Diagnostics price target of $160.20 implies upside potential of 11.3% for the stock.
Now, let’s look at what has changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, Quest’s top two risk categories are Tech & Innovation and Legal & Regulatory, which account for 25% each of the total 24 risks identified. In its recent Q3 report, the company has changed one key risk factor under the Tech & Innovation risk category.
Quest highlights that its IT systems have been and are subject to potential cyber-attacks, tampering, or other security breaches. Any successful attack may lead to shutdowns, disruptions of systems, or loss of confidential data.
In August 2021, Quest’s subsidiary, ReproSource, faced a data security incident where the attackers may have accessed the information of patients. Associated with the incident, ReproSource discovered and contained ransomware. Quest’s other systems were not impacted during this incident.
The Tech & Innovation risk factor’s sector average stands at 35%, as compared to Quest’s 25%. Shares are up 18.8% so far this year.
Related News:
Moderna Shares Rise 7% After Positive Topline Data Release
Simply Good Foods Rise 8.6% as Q4 Results Top Estimates
Fiserv, Bakkt Partner to Expand Uses of Crypto
