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Quest Diagnostics (DGX)
NYSE:DGX
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Quest Diagnostics
(NYSE:DGX)
79Outperform
Positive Factors
Earnings
Quest Diagnostics reported first-quarter results that were ahead of expectations, with significant growth in requisition volume.
Financial Performance
Quest delivered results slightly ahead of consensus revenue and earnings estimates, showcasing investor appetite for durable and predictable growers.
Growth Strategy
Quest Diagnostics' ability to continue capturing market share through hospital outreach lab acquisitions and physician lab partnerships will be key drivers of growth.
Negative Factors
Macroeconomic Impact
The 1Q weather headwind is logical and does drive estimates lower.
Market Expectations
There was a mild level of elevated expectations in terms of translating the previous high-single digit 3-year EPS CAGR into the new 7-9% long-term EPS CAGR.
Quest Diagnostics (DGX) vs. S&P 500 (SPY)
Market Cap
$19.40B
Dividend Yield1.7%
Average Volume (3M)1.49M
Price to Earnings (P/E)22.2
Beta (1Y)0.24
Revenue Growth9.38%
EPS Growth6.43%
CountryUS
Employees55,000
SectorHealthcare
Sector Strength69
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)7.91
Shares Outstanding111,635,475
10 Day Avg. Volume1,714,715
30 Day Avg. Volume1,494,170
Financial Highlights & Ratios
PEG Ratio3.46
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
$185.43Price Target Upside6.72% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
Quest Diagnostics Business Overview & Revenue Model
Company DescriptionQuest Diagnostics Incorporated provides diagnostic testing, information, and services in the United States and internationally. The company develops and delivers diagnostic information services, such as routine testing, non-routine and advanced clinical testing, anatomic pathology testing, and other diagnostic information services. It offers diagnostic information services primarily under the Quest Diagnostics brand, as well as under the AmeriPath, Dermpath Diagnostics, ExamOne, and Quanum brands to patients, clinicians, hospitals, independent delivery networks, health plans, employers, direct contract entities, and accountable care organizations through a network of laboratories, patient service centers, phlebotomists in physician offices, call centers and mobile paramedics, nurses, and other health and wellness professionals. The company also provides risk assessment services for the life insurance industry; and healthcare organizations and clinicians robust information technology solutions. Quest Diagnostics Incorporated was founded in 1967 and is headquartered in Secaucus, New Jersey.
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 presents a solid financial position with consistent revenue growth, healthy margins, and strong cash flow generation. Despite increasing leverage, operational efficiency and cash management provide a solid foundation for future growth. Continued focus on cost management and leveraging should help mitigate potential risks.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 | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.16B | 9.87B | 9.25B | 9.88B | 10.79B | 9.44B | Gross Profit |
| 3.31B | 3.24B | 2.96B | 3.43B | 4.21B | 3.63B | EBIT |
| 1.41B | 1.35B | 1.26B | 1.43B | 2.38B | 1.97B | EBITDA |
| 1.81B | 1.91B | 1.73B | 1.82B | 3.16B | 2.41B | Net Income Common Stockholders |
| 897.00M | 871.00M | 854.00M | 946.00M | 2.00B | 1.43B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 315.00M | 549.00M | 686.00M | 315.00M | 872.00M | 1.16B | Total Assets |
| 12.84B | 16.15B | 14.02B | 12.84B | 13.61B | 14.03B | Total Debt |
| 4.71B | 6.92B | 5.50B | 4.62B | 4.66B | 4.66B | Net Debt |
| 4.40B | 6.38B | 4.81B | 4.31B | 3.79B | 3.50B | Total Liabilities |
| 6.83B | 9.26B | 7.60B | 6.83B | 7.05B | 7.13B | Stockholders Equity |
| 5.89B | 6.78B | 6.31B | 5.89B | 6.44B | 6.76B |
| Cash Flow | Free Cash Flow | ||||
| 1.06B | 909.00M | 864.00M | 1.31B | 1.83B | 1.59B | Operating Cash Flow |
| 1.49B | 1.33B | 1.27B | 1.72B | 2.23B | 2.00B | Investing Cash Flow |
| -2.45B | -2.55B | -1.06B | -543.00M | 21.00M | -772.00M | Financing Cash Flow |
| 676.00M | 1.08B | 160.00M | -1.73B | -2.54B | -1.27B |
Quest Diagnostics Technical Analysis
Positive
173.76
Price Trends
168.75
Positive
162.00
Positive
156.31
Positive
Market Momentum
1.39
Negative
59.24
Neutral
88.14
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DGX, the sentiment is Positive. The current price of 173.76 is above the 20-day moving average (MA) of 167.05, above the 50-day MA of 168.75, and above the 200-day MA of 156.31, indicating a bullish trend. The MACD of 1.39 indicates Negative momentum. The RSI at 59.24 is Neutral, neither overbought nor oversold. The STOCH value of 88.14 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $19.40B | 22.23 | 13.35% | 1.70% | 9.38% | 6.43% | |
68 Neutral | $19.12B | 25.86 | 9.37% | 1.26% | 0.83% | 89.55% | |
53 Neutral | $1.32B | ― | -8.54% | ― | 11.65% | 11.33% | |
51 Neutral | $5.32B | 3.32 | -40.25% | 2.90% | 17.93% | 2.14% | |
51 Neutral | $679.30M | ― | -17.15% | ― | 12.15% | 61.33% | |
48 Neutral | $946.89M | ― | -3.87% | ― | -17.42% | 70.55% | |
45 Neutral | $1.89B | ― | -50.74% | ― | -7.03% | -20233.78% |
* Healthcare Sector Average
Performance Comparison
DGX
Quest Diagnostics
173.76
42.17
32.05%
LH
Labcorp Holdings
228.31
32.40
16.54%
MYGN
Myriad Genetics
7.42
-10.76
-59.19%
OPK
Opko Health
1.41
0.15
11.90%
QDEL
QuidelOrtho
28.09
-11.55
-29.14%
NEO
NeoGenomics
10.27
-3.87
-27.37%
Quest Diagnostics Earnings Call Summary
Earnings Call Date: Apr 22, 2025 | % Change Since: 7.35% | Next Earnings Date: Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with strong revenue growth, successful partnerships, and strategic initiatives driving the business forward. However, there were some challenges, including impacts from weather, labor costs, and a strike affecting LifeLabs. Overall, the positive aspects outweighed the negatives, as evidenced by reaffirmed guidance and successful new product launches.Highlights
Strong Revenue Growth
Consolidated revenues were $2.65 billion, up 12.1% compared to the prior year, with organic revenue growth of 2.4%.
Advanced Diagnostics Growth
Advanced diagnostics in key areas such as cardiometabolic, autoimmune, and brain health grew at double-digit rates.
Optum Health Partnership
Quest Diagnostics was named as the first independent national lab to be selected to the Optum Health preferred lab network.
Reaffirmed Guidance
Quest Diagnostics reaffirmed their revenue and adjusted EPS guidance for the full year 2025.
Operational Excellence Initiatives
The company continues to target 3% annual cost savings and productivity improvements through Invigorate and is also investing in Project Nova.
Successful Launch of Haystack MRD Test
Quest Diagnostics received commercial orders for their Haystack MRD test, which assesses early risk of cancer recurrence.
Lowlights
Impact of Weather and Fewer Days
Volume growth was reduced by approximately 160 basis points due to weather impacts and one less day compared to the prior year.
Labor Costs
Wage increases impacted operating income, although turnover improved to mid to high teens.
LifeLabs Strike
A strike in the British Columbia region affected around 1,200 employees, part of a larger union, with management backfilling positions.
Company Guidance
During the Quest Diagnostics First Quarter 2025 Conference Call, the company reported a robust 12% revenue growth, driven by nearly 2.5% organic growth as demand rebounded in March. Acquisitions and large enterprise accounts contributed to this growth, as did the demand for advanced diagnostics and expanded health plan access. The company's consolidated revenues for the quarter amounted to $2.65 billion, with Diagnostic Information Services revenue increasing by 12.7% year-over-year. Additionally, total volume grew by 12.4%, although organic volume experienced a slight decline of 0.9%. Reported operating income was $346 million, representing 13% of revenues, while adjusted operating income was $406 million, or 15.3% of revenues. Quest Diagnostics reaffirmed its full-year 2025 revenue guidance of $10.7 billion to $10.85 billion and adjusted EPS guidance of $9.55 to $9.80. The company also anticipates cash from operations to be approximately $1.5 billion and capital expenditures of about $500 million.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.