UPDATE: Citigroup Lowers PT on Quest Diagnostics, Two Shots are Enough

In a report published Wednesday, Citigroup analyst Gary Taylor reiterated a Neutral rating on Quest Diagnostics (NYSE: DGX), but lowered the price target from $59.00 to $58.00.

In the report, Citigroup noted, “Both LH and BRLI have recently cited material reimbursement and industry pressures; we think it is prudent to answer the obvious investor question by lowering our expectations for DGX in 2014, while we continue to expect the 2015 CMS rebasing of CLFS to drive a material yty decline of EBITDA. To account for what we presume is further MAC and commercial pressure on molecular diagnostics reimbursement, we are lowering 2014E operating margin by 150bp and maintaining our expectation of at least another 100bp decline in 2015. We are lowering 2014E/15E cash EPS from $4.52/$4.71 to $4.04/4.36. Our model assumes $550m of share repurchase in both years. We are lowering our 12-month price target from $59 to $58, based on a risk-adjusted target P/E of 13.5x.”

Quest Diagnostics closed on Tuesday at $58.60.