Shares of Quest Diagnostics (NYSE: DGX), the provider of healthcare diagnostic testing services, are up nearly 9% on more than seven times the average daily volume and are trading near $80 after earlier touching $89 after rumors circulated on Twitter that the company had supposedly hired Goldman Sachs to explore a sale.
Joe Kunkle, founder of OptionsHawk.com , has since removed that tweet, according to Bloomberg, but Kunkle clarified to the news agency that he did not actually say Quest hired Goldman and that he was merely passing along information found online. He did note on a separate tweet that Quest out-of-the-money calls are “staying bid.”
The action in Quest is having little impact on the iShares U.S. Healthcare Providers ETF (NYSEArca: IHF), an exchange traded fund that allocates 2.7% of its weight to Quest, making the stock the eleventh-largest of the ETF’s 49 holdings.
IHF, home to nearly $866 million in assets under management, is no stranger to takeover rumors and speculation. Last week, it was reported that Aetna (NYSE: AET) could go shopping and its targets could be Cigna (NYSE: CI) or Humana (NYSE: HUM). Those stocks combine for over 18% of IHF’s weight. [More M&A Coming for This Healthcare ETF]
Earlier this year, Dow component UnitedHealth (NYSE: UNH), IHF’s largest holding at a weight of 13.9%, agreed to acquire Catamaran for $12.8 billion in cash.
In 2009, Express Scripts (NasdaqGM: ESRX) spent $4.7 billion to acquire WellPoint and followed up that deal with the $29 billion acquisition of Medco in 2012. [Healthcare ETFs Remain Sturdy]
Last year, Morgan Stanley identified Express Scripts, Cigna and Aetna as possible takeover targets. Investors like the IHF story. A year ago, IHF had about $400 million in assets under management, meaning the ETF’s AUM total has more than doubled in a year.
iShares U.S. Healthcare Providers ETF