Quest Diagnostics (NYSE:DGX) shares rose more than 1% intra-day today after Morgan Stanley upgraded the company to Overweight from Equalweight, raising its price target to $172 from $145. The upgrade reflected increased confidence in Quest’s medium- to long-term growth prospects and its ability to sustain momentum in a favorable utilization environment heading into 2025.

Previously cautious on Quest’s post-COVID recovery, Morgan Stanley acknowledged improved clarity around the company’s trajectory. With robust healthcare utilization trends persisting across the sector, Quest appeared well-positioned to benefit, particularly given its relative insulation from potential election-related risks.

Although Quest had yet to provide official 2025 guidance, management had reaffirmed its long-term growth targets. The company anticipates approximately 3% organic revenue growth annually through 2026, in line with its strategic goals. Additional tailwinds include high-single-digit earnings growth, margin expansion of 75–150 basis points, and incremental contributions from mergers and acquisitions, estimated at 1–2% annually. Combined, these factors point to a mid-single-digit revenue compound annual growth rate and sustained earnings improvement.

With favorable trends supporting its core business and an encouraging outlook for margins and earnings, Quest Diagnostics appears well-poised for continued growth and shareholder value creation in the coming years.