In a report published Thursday, Morgan Stanley analyst Ricky R. Goldwasser reiterated an Underweight rating on Quest Diagnostics DGX, but removed the $58.00 price target.
In the report, Morgan Stanley noted, “Following LH's disappointing 2014 guidance, we revisited and updated our DGX model to take account of the industry specific headwinds cited by LH including bad debt expense related to greater patient responsibility, molecular payment delays, and continued reimbursement pressure. We now model CY14/CY15 EPS of $4.12/$4.34 vs. consensus' $4.26/$4.69 and our prior $4.35/$4.76. Importantly, we now model flat EBIT growth in CY14 and -0.2% in CY15 as the ~$600 million in run-rate Invigorate savings estimated in 2014 offset environmental headwinds reflected in our LH EBIT decline of -8.5%.”
Quest Diagnostics closed on Wednesday at $55.20.
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