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- 📈 Quest Diagnostics (DGX): Diagnosing a Healthy Upside
📈 Quest Diagnostics (DGX): Diagnosing a Healthy Upside
Resilient Trader
May 15, 2025
Why DGX Is Poised for Growth-Despite the Noise
Regular people are starting to trade like institutional traders-and they’re making a living doing it. But not everyone is successful with their trades. There is a right way and a wrong way. We’re here to help you find vetted trade ideas so you actually make money off your trading.
Every week, we surface vetted setups that institutions are already circling-tailored with strategies for traders like us.
This week’s trade? A healthcare stock that just whiffed a bit on guidance… but we’re buying the small dip.
🧠 Trade Thesis: DGX-Strong Vitals, Minor Fever
Quest Diagnostics $DGX ( ▲ 0.46% ) is a core player in U.S. diagnostic services. A $0.10 guidance cut in Q1 2025 spooked some folks-but we see a solid, scalable business with long-term tailwinds and an undervalued chart.
📌 This is a high-conviction long backed by margin strength, market share gains, and healthcare's built-in resilience.
💡 Why We're Long DGX
Expanding Market Share in a fragmented diagnostics space
Defensive Sector: Stable demand regardless of economic cycles
Strong KPIs despite a minor Q1 weather-related hiccup
Healthy Margins and solid cash flow
Low EV/Sales vs. historical valuation norms
Dividend Growth (recently boosted 6.7%) = management confidence
📊 Fundamentals Snapshot
Q1 Revenue Up 12% YoY, with ~2.5% organic growth
High EBITDA Margins signal pricing power and efficiency
Solid Balance Sheet + dividend = long-term strength
Healthcare Tailwinds: Aging population, preventative care, and precision medicine are secular growth trends
DGX isn't a flashy name. It's just a profitable, well-run company in a sector that rarely goes out of style.
⚖️ Valuation: Still Undervalued
Low EV/Sales = market is mispricing the upside
Stock insights tools show DGX trading at a 20–26% discount
Analyst targets lean bullish (some $190+), and with momentum, a re-rating is possible
📈 Technicals: Building a Base for Breakout
Current Price (May 12, 2025): $173.44
Above 20-week and 50-week SMAs
Golden Cross on Weekly Chart (20-week SMA > 50-week) = bullish momentum forming
Long Term Support: $163.00
Resistance: $180.00
Price Targets:
🎯 First Target: $190
🚀 Stretch Target: $220–230
💥 Trade of the Week: Buy Stock + Sell Puts
Here’s how we’re playing the upside:
✅ Buy the Stock
Entry: $173.44
Upside: Unlimited
Risk: Downside managed via optional stop-loss (suggested below $150 or by trailing)
Sell June $165 Put for ~$1.75
If DGX stays above $165, you keep the premium.
If it drops, you’re assigned at a net price of $163.25-a level we’re happy to own at.
🧠 Advanced Move: Continue selling ~30 delta monthly puts while DGX trends toward $190+. It’s income while you wait.
🚀 Catalysts We’re Watching
Earnings Beats + upward guidance revisions
New diagnostic products or strategic partnerships
Reimbursement/Policy Wins boosting sector outlook
Bullish Analyst Revisions
M&A headlines or new acquisitions
Technical breakout above $190
🛑 Risk Management Tip
Put Sellers: Be comfortable owning at your strike - or roll down/out if the chart deteriorates
🧠 Final Thoughts
DGX isn’t exciting-but boring can be beautiful. While some traders chase high-volatility names, we’re after high-probability setups.
Quest Diagnostics offers a steady path to upside-with the balance sheet, margins, and macro trends to back it.
When the market misprices quality, we step in.
💸 Action Plan:
Buy DGX around $173
Sell the June $165 Puts
Rinse and repeat monthly with 30 delta puts while riding it up
Want trade ideas like this every week-plus strategic options plays and institutional-grade setups?
Stay Liquid,
- The Resilient Trader