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Quest Diagnostics (DGX)
NYSE:DGX
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Quest Diagnostics
(NYSE:DGX)
76Outperform
Positive Factors
Financial Stability
DGX is considered an attractive investment opportunity in an uncertain macroeconomic environment given high earnings visibility, strong cash flow generation, and a solid balance sheet.
Growth Strategy
Quest Diagnostics aims for faster than market growth by expanding access with new health plan relationships and partnerships with larger enterprise accounts.
Market Position
Quest Diagnostics' key growth pillars are supported by favorable macro trends in the US lab market, enhancing its competitive position.
Negative Factors
Regulatory Challenges
Potential challenges to achieving earnings growth include the possibility of PAMA cuts in 2026, which could impact earnings growth targets for that year.
Short-term Earnings Pressure
The reaffirmed 2025 guidance includes a $0.10 EPS weather headwind along with investments in Project Nova and regulatory compliance, impacting short-term earnings.
Weather Impact
Weather headwinds are expected to impact Quest Diagnostics' revenue and earnings per share.
Quest Diagnostics (DGX) vs. S&P 500 (SPY)
Market Cap
$18.94B
Dividend Yield1.76%
Average Volume (3M)1.20M
Price to Earnings (P/E)22.3
Beta (1Y)0.21
Revenue Growth6.70%
EPS Growth2.56%
CountryUS
Employees45,000
SectorHealthcare
Sector Strength79
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)7.70
Shares Outstanding110,978,065
10 Day Avg. Volume1,086,077
30 Day Avg. Volume1,203,240
Financial Highlights & Ratios
PEG Ratio8.69
Price to Book (P/B)N/A
Price to Sales (P/S)1.88
Price to Cash Flow (P/CF)10.00
P/FCF Ratio9.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$182.36Price Target Upside11.07% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
Quest Diagnostics Business Overview & Revenue Model
Company DescriptionQuest Diagnostics (DGX) is a leading provider of diagnostic information services, primarily operating in the healthcare sector. The company offers a comprehensive suite of clinical testing services, including routine blood tests, genetic testing, and advanced diagnostics. Quest Diagnostics also provides laboratory testing, consultation, and healthcare IT solutions to patients, physicians, hospitals, and employers, helping them make informed healthcare decisions.
How the Company Makes MoneyQuest Diagnostics generates revenue primarily through its diagnostic information services. The company's key revenue streams include clinical laboratory testing, which involves processing and analyzing samples from blood and other body fluids, and providing results to healthcare providers. Additionally, Quest Diagnostics earns money from partnerships and collaborations with hospitals, healthcare systems, and pharmaceutical companies, offering them specialized testing services and insights. The company also makes money through its healthcare IT solutions, which streamline laboratory data management and integrate with healthcare providers' systems. Factors contributing to Quest Diagnostics' earnings include its extensive network of laboratories and patient service centers, strategic acquisitions, and ongoing innovation in diagnostic testing.
Quest Diagnostics Financial Statement Overview
Summary
Quest Diagnostics shows consistent revenue growth and strong margins, though net profit margins have slightly decreased. The balance sheet reveals growing leverage but remains stable, and cash flow is strong, indicating solid operational efficiency.Income Statement
Quest Diagnostics has shown consistent revenue growth from $7.73 billion in 2019 to $9.87 billion in 2024. The gross profit margin remains strong, although slightly fluctuating, with a significant decrease in 2021 due to pandemic-related impacts. The EBIT and EBITDA margins are healthy, indicating good operational efficiency. However, the net profit margin has slightly decreased over the years, reflecting increased costs or expenses.80
Positive
Balance Sheet
The company's balance sheet reveals a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. Stockholders' equity has grown steadily, reflecting strong reinvestment strategies. The equity ratio remains stable, suggesting sound financial health. However, the increase in total debt from 2021 poses a potential risk if not managed carefully.75
Positive
Cash Flow
Quest Diagnostics demonstrates strong operating cash flow relative to net income, indicating efficient cash generation from operations. Free cash flow has remained positive, supporting financial flexibility and investment capacity. The free cash flow growth rate has been robust, although capital expenditure levels suggest careful capital management.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 9.87B | 9.25B | 9.88B | 10.79B | 9.44B | Gross Profit |
| 3.24B | 2.96B | 3.43B | 4.21B | 3.63B | EBIT |
| 1.35B | 1.26B | 1.43B | 2.38B | 1.97B | EBITDA |
| 1.91B | 1.73B | 1.82B | 3.16B | 2.41B | Net Income Common Stockholders |
| 871.00M | 854.00M | 946.00M | 2.00B | 1.43B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 549.00M | 686.00M | 315.00M | 872.00M | 1.16B | Total Assets |
| 16.15B | 14.02B | 12.84B | 13.61B | 14.03B | Total Debt |
| 6.92B | 5.50B | 4.62B | 4.66B | 4.66B | Net Debt |
| 6.38B | 4.81B | 4.31B | 3.79B | 3.50B | Total Liabilities |
| 9.26B | 7.60B | 6.83B | 7.05B | 7.13B | Stockholders Equity |
| 6.78B | 6.31B | 5.89B | 6.44B | 6.76B |
| Cash Flow | Free Cash Flow | |||
| 909.00M | 864.00M | 1.31B | 1.83B | 1.59B | Operating Cash Flow |
| 1.33B | 1.27B | 1.72B | 2.23B | 2.00B | Investing Cash Flow |
| -2.55B | -1.06B | -543.00M | 21.00M | -772.00M | Financing Cash Flow |
| 1.08B | 160.00M | -1.73B | -2.54B | -1.27B |
Quest Diagnostics Technical Analysis
Negative
164.18
Price Trends
167.96
Negative
161.78
Positive
154.89
Positive
Market Momentum
-0.16
Positive
52.00
Neutral
63.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGX, the sentiment is Negative. The current price of 164.18 is below the 20-day moving average (MA) of 168.42, below the 50-day MA of 167.96, and above the 200-day MA of 154.89, indicating a neutral trend. The MACD of -0.16 indicates Positive momentum. The RSI at 52.00 is Neutral, neither overbought nor oversold. The STOCH value of 63.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DGX.
Quest Diagnostics Risk Analysis
Quest Diagnostics disclosed 27 risk factors in its most recent earnings report. Quest Diagnostics reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Quest Diagnostics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $18.94B | 22.26 | 13.24% | 1.76% | 6.70% | 2.56% | |
73 Outperform | $19.54B | 26.41 | 9.37% | 1.23% | 0.83% | 89.55% | |
54 Neutral | $1.05B | ― | -3.87% | ― | -17.42% | 70.55% | |
52 Neutral | $1.12B | ― | -8.54% | ― | 11.65% | 11.33% | |
51 Neutral | $767.91M | ― | -17.15% | ― | 12.15% | 61.33% | |
48 Neutral | $6.86B | 1.11 | -50.22% | 2.47% | 16.71% | 1.53% | |
46 Neutral | $2.19B | ― | -50.74% | ― | -7.03% | -20233.78% |
* Healthcare Sector Average
Performance Comparison
DGX
Quest Diagnostics
164.18
36.10
28.19%
LH
Labcorp Holdings
225.00
17.52
8.44%
MYGN
Myriad Genetics
8.13
-12.21
-60.03%
OPK
Opko Health
1.55
0.15
10.71%
QDEL
QuidelOrtho
28.13
-15.22
-35.11%
NEO
NeoGenomics
8.78
-6.07
-40.88%
Quest Diagnostics Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 5.62% | Next Earnings Date: Apr 22, 2025
Earnings Call Sentiment Positive
Quest Diagnostics reported strong revenue growth driven by acquisitions and expansions in Advanced Diagnostics. Despite challenges like weather impacts and pricing pressure in the hospital segment, the overall sentiment remains positive due to strategic acquisitions, improvements in consumer testing, and operational efficiencies.Highlights
Strong Revenue Growth
Quest Diagnostics reported impressive revenue growth of nearly 15% in the fourth quarter, including approximately 5% organic growth. For the full year, revenue growth was close to 7%, with 3% attributed to organic growth.
Successful Acquisitions
In 2024, Quest completed eight acquisitions, including LifeLabs in Canada and four hospital outreach lab businesses in the US, which significantly contributed to revenue growth.
Advanced Diagnostics Expansion
Quest expanded its Advanced Diagnostics menu, achieving double-digit growth in several clinical areas, such as brain health, advanced cardiometabolic, autoimmune, and women's health.
Consumer-Initiated Testing Growth
The consumer-facing platform, questhealth.com, saw revenue growth of nearly 50% in the fourth quarter and approximately 40% for the full year, reaching over $60 million.
Operational Excellence
Quest's Invigorate program delivered targeted 3% annual cost savings and productivity improvements, supported by investments in automation and AI.
Lowlights
Weather Impact on Volume
In the fourth quarter, weather negatively impacted volume by approximately 50 basis points, affecting the overall volume growth.
Higher Interest Expenses
Adjusted EPS in the fourth quarter was impacted by higher interest expenses and a higher tax rate compared to the prior year.
Pricing Pressure in Hospital Segment
Price pressure continued in the hospital segment, particularly in reference testing, due to an increase in RFPs post-COVID.
Company Guidance
During the Quest Diagnostics fourth quarter and full-year 2024 earnings call, the company provided guidance for 2025, emphasizing confidence in its core business strengths. For 2025, Quest Diagnostics expects revenues between $10.7 billion and $10.85 billion, with an organic revenue growth target of approximately 3%, supplemented by growth from acquisitions completed in 2024. Adjusted EPS is projected to range from $9.55 to $9.80, while cash from operations is anticipated to be around $1.45 billion. The company foresees margin expansion driven by organic growth and acquisitions, despite planned investments of $20 million in IT and regulatory compliance. They also noted their Invigorate program's success in delivering a 3% annual cost savings target. Key growth drivers include Advanced Diagnostics and expanded access through acquisitions, such as the integration of LifeLabs in Canada. The guidance reflects expected revenue contributions from the launch of the Haystack MRD test, with anticipated improvements in operational efficiency from ongoing investments in automation and AI.Quest Diagnostics Corporate Events
Business Operations and StrategyFinancial Disclosures
Quest Diagnostics Unveils Growth Strategy at Investor Day
Positive
Mar 19, 2025
On March 19, 2025, Quest Diagnostics hosted an Investor Day to discuss strategies for sustainable growth and long-term shareholder value. The company highlighted its focus on advanced diagnostics, aiming for double-digit revenue growth in key clinical areas. Quest is leveraging macro trends like demographic shifts and innovations in lab diagnostics to enhance its market position. The company anticipates a 4% to 5% revenue CAGR and a 7% to 9% adjusted EPS CAGR beyond 2025, driven by investments in technology and expanded health plan network access.
Business Operations and StrategyFinancial Disclosures
Quest Diagnostics Outlines Growth Strategies at Investor Day
Positive
Mar 19, 2025
On March 19, 2025, Quest Diagnostics hosted its Investor Day, where the leadership team outlined strategies for sustainable growth and long-term shareholder value. The company reaffirmed its 2025 guidance and provided a long-term outlook, anticipating revenue growth at a 4-5% CAGR and adjusted EPS growth at a 7-9% CAGR beyond 2025. Key initiatives include expanding market access, advancing diagnostics, and modernizing IT systems to enhance productivity and customer experiences. Despite a weather-related revenue headwind in Q1 2025, Quest remains focused on strategic partnerships and acquisitions to drive growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.