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Is Quest Diagnostics Stock Right for Your Portfolio?

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On Thursday, Oct. 22, Quest Diagnostics released its third-quarter earnings ahead of the opening bell. Management will host a conference call to discuss the results.

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What does Quest Diagnostics do?

Quest Diagnostics provides clinical laboratory test services. The company offers various tests for cancer, neurological disorders, cardiovascular diseases, and infectious diseases. Quest Diagnostics is one of the companies providing COVID-19 testing. In addition to the U.S., Quest Diagnostics operates in Mexico and Brazil. The company has a partnership arrangement with hospitals and clinics around the world.

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Source: Quest Diagnostics
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Highlights from Quest Diagnostics' earnings report

Quest Diagnostics reported revenue of $2.8 billion, which jumped from $2.0 billion a year ago and beat the consensus estimate at $2.7 billion. The company posted an EPS of $4.31, which rose from $1.76 a year ago and beat the consensus estimate at $3.72. Strong demand for COVID-19 testing boosted Quest’s earnings in the third quarter. 

What is Quest Diagnostics' stock price today?

Quest Diagnostics stock popped up 2.76 percent to $126.22 in pre-market trading on Oct. 22 ahead of the company’s earnings report. The stock closed at $122.83 on Oct. 21 after trading in the range of $122.73–$125.80 for the day. Quest Diagnostics stock is up 15 percent in 2020 but still trades at nearly a 10 percent discount to its 52-week high.

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What is Quest Diagnostics’ stock forecast?

The most bullish analyst on Wall Street sees a 30 percent upside in Quest Diagnostics stock from the current level to $159 in 12 months. Even the most bearish target price of $124 implies an upside potential of about 1.0 percent for the stock.

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Is Quest Diagnostics stock right for your portfolio? First, investors looking to play the COVID-19 pandemic may find Quest attractive. The company is at the forefront of fighting the coronavirus pandemic and is doing millions of COVID-19 tests. Investors seeking out stocks with dividends in the healthcare sector may also find Quest Diagnostics ideal for their portfolio.

Quest Diagnostics operates in a space where there will always be demand. For example, growing health awareness and an aging global population are only going to increase the demand for diagnostic testing and create more business for companies like Quest Diagnostics. The global clinical laboratory tests market is on track to hit $305 billion in 2027 from $176.7 billion in 2019, according to Grand View Research. 

What is Quest Diagnostics’ dividend policy?

Quest Diagnostics pays a quarterly cash dividend. The company’s latest dividend was $0.56 per share, which it distributed on Oct. 21. Quest Diagnostics has paid a dividend three times in 2020 at the amount of $0.56, which is an increase from $0.53 last year. 

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