Quest Diagnostics has inked an agreement with the US Centers for Disease Control and Prevention (CDC) to provide genomic sequencing to identify new mutations and patterns of transmission of SARS-CoV-2, the virus that causes COVID-19.
Quest (DGX) didn’t disclose the financial terms of the collaboration. As part of the agreement, the diagnostics company will help CDC in conducting a large-scale longitudinal genomic survey of the SARS-CoV-2 virus using a random set of samples collected from its labs across the US. Quest will conduct the sequencing from its advanced diagnostics laboratory in San Juan Capistrano, California.
The collaboration comes as highly transmissible variants of the SARS-CoV-2 virus first discovered in the UK and South Africa have been identified in the US.
“Public and private collaboration is essential to mobilizing an effective response to COVID-19," said Quest Chief Medical Officer Jay G. Wohlgemuth. "Quest has the expertise in genomics and infectious diseases, as well as extensive COVID-19 testing data and access to patient samples. Our program will complement and extend the efforts of the CDC to discover and track new virus mutations and thereby improve public health response to the pandemic."
The CDC's survey aims to provide baseline information for national and state-level surveillance, help define changes in transmission, identify new variants of the virus, and improve the public health response to the virus.
Quest shares have gained 16% over the past year and looking ahead, the average analyst price target of $137.83 implies 11% upside potential in the coming 12 months.
Last month, Morgan Stanley analyst Ricky Goldwasser downgraded the stock to Hold from Buy and slashed the price target to $130 from $146.
Goldwasser expects earnings to decline in 2022 and as a result the analyst believes the stock is bound to underperform. For 2021 though, Street estimates are too low as the market is underestimating the near-term benefit from PCR testing, according to Goldwasser.
The rest of the Street is cautiously optimistic outlook on the stock. The Moderate Buy consensus is based on 5 Buys versus 3 Holds. (See Quest Diagnostics stock analysis on TipRanks).