DGX - Quest Diagnostics: Post-COVID Normalization Pretty Much Done

2024-02-05 05:36:10 ET

Summary

• Quest Diagnostics is a leading provider of diagnostic information services, offering laboratory testing, genomics, and other diagnostic solutions.
• During 2020, COVID-19 detection tests played an important role in the atypical growth of the top line and the substantial increase in margins. This factor has already been completely normalized.
• From this base point, I expect low-single-digit organic growth and improved margins, which, together with a dividend yield of 2.4%, should be enough to obtain an attractive return.

Investment Thesis

Quest Diagnostics ( DGX ) is an exceptionally stable company that operates a fantastic business. Over the last 10 years, its total return has exceeded that of the S&P500, and in the last 20 years, its shares have never fallen by more than 36%, even during the crises of 2008 and 2020. This fact underscores the resilience and strength of the business....

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