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The Zacks Analyst Blog Highlights: Target, Wal-Mart Stores, Amazon.com, Costco Wholesale and Quest Diagnostics

Abhijit Ghosh

For Immediate Release

Chicago, IL – October 23, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Target Corporation (TGT), Wal-Mart Stores Inc. (WMT), Amazon.com Inc. (AMZN), Costco Wholesale Corporation (COST) and Quest Diagnostics (DGX).


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Here are highlights from Monday’s Analyst Blog:


Target to Open More Stores


In an effort to further strengthen its operational roots, Target Corporation (TGT), the operator of general merchandise and food discount stores in the United States, announced the opening of 3 new stores in Chicago, New York and San Francisco.

The move reflects the company’s strategic initiative to expand in regions where it generates strong sales. Moreover, the San Francisco store is the extension of its smaller-format stores called CityTarget.

Target Corporation, in order to tap the urban markets where real estate remains a constraint, plans to introduce smaller-format stores called CityTarget, similar to that of its biggest rival, Wal-Mart Stores Inc. (WMT).

Earlier, the company unveiled its first three smaller format stores in Los Angeles, Seattle and Chicago. We believe that the approach will help the company to augment its sales by enhancing its accessibility to the country’s thickly populated urban regions and space-crunched cities.

The company has announced its plan to open 10 Target stores in 2013, which includes the smaller format stores in Los Angeles, Portland and San Francisco.

Moreover, the company for the first time announced that it will allow its shoppers to match the prices being offered by online retail giants. Consumers will have the facility of compare prices being offered by Amazon.com Inc. (AMZN), Wal-Mart Stores Inc.’s Walmart.com, Best Buy Co. Inc.’s BestBuy.com and Toysrus.com.

According to the price matching policy, the customer will not find any discrepancy in pricing if an item is purchased between November 1st and December 24th from Target stores. However, if the item costs less at Target.com or in a local competitor’s printed ad, Target will provide items matching the price.

Currently, we have a long-term ‘Neutral’ rating on the stock. However, the company, which competes with Costco Wholesale Corporation (COST), holds a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating.



DGX to Buy UMass Medical Center


Leading diagnostic tester Quest Diagnostics (DGX) is keeping at par with its Merger and Acquisition (M&A) strategy which the company expects to remain as its key driver of growth. Recently as part of this strategy, the company teamed up with Central New England’s largest health care system UMass Memorial Health Care to purchase its UMass Memorial Medical Center.

Although financial terms of this definitive purchase agreement were not disclosed, Quest Diagnostics expects the transaction to be completed in the next 3 months, subject to certain customary regulatory clearance. The diagnostic testing stalwart expects the incorporation of UMass Memorial Medical Center to add 1% to the company’s consolidated revenues in the next fiscal with no bottom-line impact. However, the company expects this transaction to be accretive to its earnings per share (EPS) in fiscal 2014.

Quest Diagnostics expects this acquisition to establish a long-term relationship between the two organizations. The plan states that Quest Diagnostics' full-service laboratory in Cambridge and its Athena Diagnostics specialty neurology testing subsidiary in Worcester will be moved to a centrally located new facility in Massachusetts.

The company expects this facility, after being fully operational in next 18–24 months, to perform the testing currently performed at UMass Memorial's Worcester-based outreach laboratories as well as Quest Diagnostics’ Cambridge and Athena.

Per the plan, UMass Memorial will be taking a financial stake in the new entity that would develop and operate a leading-edge laboratory in Massachusetts in the future. Both the organizations expect this advanced laboratory service to include a number of benefits like higher quality service, expanded information connectivity options, and reduced laboratory testing costs.

Quest Diagnostic believes that the impending acquisition is in sync with its goal to create the company’s planned 'lab of the future' which will help it increase long-term growth opportunities and increase shareholders' value.


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