Quest Diagnostics (DGX)

At the close of fiscal year 2006, Quest had a substantial amount of debt relative to their assets. They also took out a one-time loan for the acquisition of HemoCue. Without making headway against their debt, Quest may run into trouble maintaining growth and their current businesses.

This is based on a Sell signal of a Jeanty Sell pattern. See http://www.wikinvest.com/image/LUV_SELL.jpg for a description of the pattern.

Here is the current pattern for DGX:

Having looked at the definition of a Jeanty Sell Pattern, you should be able to see the 4 components of a Jeanty Sell Signal and figure out the target price of $54.36.

Checking on this forgotten prediction we have this chart: The target was reached in 4 bars.

Government payers, such as Medicare and Medicaid, as well as private payers and larger employers may continue to take steps to control the cost, utilization and delivery of healthcare services, including clinical laboratory services which could seriously cut in to Quest’s revenue and profit.

FDA regulation of laboratory-developed tests and/or genetic testing could lead to increased costs and delays in introducing new genetic tests, an important and growing segment of Quest’s business.