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Quest Diagnostics (DGX)
:DGX
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Quest Diagnostics
(NYSE:DGX)81Outperform
Positive Factors
Financial Performance
Quest Diagnostics reported a good quarter for Q4:24, beating consensus adjusted EPS estimates, driven by continued growth in the company's base business.
Market Expansion
The acquisition marks DGX's expansion into the end-stage kidney disease market, which has a significant patient population in the US.
Negative Factors
Growth Concerns
The 3% organic topline growth embedded in guidance is lower compared to what DGX has historically done recently.
Quest Diagnostics (DGX) vs. S&P 500 (SPY)
Market Cap
$19.42B
Dividend Yield1.7%
Average Volume (3M)1.19M
Price to Earnings (P/E)22.8
Beta (1Y)0.28
Revenue Growth6.70%
EPS Growth2.56%
CountryUS
Employees48,000
SectorHealthcare
Sector Strength74
IndustryMedical Diagnostics & Screening
Share Statistics
EPS (TTM)7.70
Shares Outstanding110,978,065
10 Day Avg. Volume1,203,824
30 Day Avg. Volume1,191,423
Financial Highlights & Ratios
PEG Ratio8.92
Price to Book (P/B)N/A
Price to Sales (P/S)1.99
Price to Cash Flow (P/CF)10.60
P/FCF Ratio9.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$180.77Price Target Upside3.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Quest Diagnostics Business Overview & Revenue Model
Company DescriptionQuest Diagnostics, Inc. engages in the provision fo diagnostic testing, information and services. It operates through the Diagnostic Information Services (DIS) and All Other segments. The DIS segment offers diagnostic information services to patients, clinicians, hospitals, health plans, and employers. The All Other segment consists of risk assessment services, healthcare information technology, diagnostic products, and clinical trials testing businesses. The company was founded in 1967 and is headquartered in Secaucus, NJ.
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 cash flow, with healthy margins. However, the balance sheet's increasing leverage poses potential risk, offset by operational efficiency and cash management.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
Positive
175.01
Price Trends
159.98
Positive
157.86
Positive
151.41
Positive
Market Momentum
4.31
Negative
65.34
Neutral
71.02
Neutral
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 175.01 is above the 20-day moving average (MA) of 169.63, above the 50-day MA of 159.98, and above the 200-day MA of 151.41, indicating a bullish trend. The MACD of 4.31 indicates Negative momentum. The RSI at 65.34 is Neutral, neither overbought nor oversold. The STOCH value of 71.02 is Neutral, 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 26 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 (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $19.42B | 22.84 | 13.24% | 1.70% | 6.70% | 2.56% | |
73 Outperform | $21.49B | 29.05 | 9.37% | 1.13% | 0.83% | 89.55% | |
57 Neutral | $1.29B | ― | -3.87% | ― | -17.42% | 70.55% | |
52 Neutral | $1.28B | ― | -8.72% | ― | 11.65% | 11.33% | |
51 Neutral | $951.44M | ― | -15.85% | ― | 12.15% | 61.33% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% | |
46 Neutral | $2.63B | ― | -67.92% | ― | -7.03% | -20233.78% |
* Healthcare Sector Average
Performance Comparison
DGX
Quest Diagnostics
175.01
50.71
40.80%
LH
Labcorp Holdings
256.81
41.75
19.41%
MYGN
Myriad Genetics
10.42
-12.52
-54.58%
OPK
Opko Health
1.92
0.98
104.26%
QDEL
QuidelOrtho
38.97
-3.90
-9.10%
NEO
NeoGenomics
9.34
-6.44
-40.81%
Quest Diagnostics Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 12.59% | Next Earnings Date: Apr 23, 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.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.