Quest Diagnostics (DGX) AI Stock Analysis

• Market Cap: $19.20B
• Dividend Yield: 1.77%
• Average Volume (3M): 1.24M
• Price to Earnings (P/E): 21.9
• Beta (1Y): 0.26
• Revenue Growth: 9.38%
• EPS Growth: 6.43%
• Country: US
• Employees: 55,000
• Sector: Healthcare
• Sector Strength: 42
• Industry: Medical - Diagnostics & Research
• EPS (TTM): 2.21
• Shares Outstanding: 111,635,475
• 10 Day Avg. Volume: 1,066,655
• 30 Day Avg. Volume: 1,243,927
• PEG Ratio: 7.41
• Price to Book (P/B): 2.83
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 18.71
• Enterprise Value/Market Cap: 1.36
• Enterprise Value/Revenue: 0.67
• Enterprise Value/Gross Profit: 7.90
• Enterprise Value/Ebitda: 3.54
• 1Y Price Target: $188.83
• Price Target Upside: 8.94% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 79 Outperform
• Price Target: ―

Quest Diagnostics is performing well with strong financials and a positive earnings outlook. Solid revenue growth and strategic partnerships enhance its position, though valuation is moderate. Technical indicators suggest a stable trend, and the reaffirmed guidance from the earnings call supports a positive future outlook. High debt levels and short-term technical weaknesses are areas to watch.

Positive Factors

Financial Performance

Quest delivered results slightly ahead of consensus revenue and earnings estimates, showcasing investor appetite for durable and predictable growers.

Growth Prospects

Management expressed greater conviction in Quest Diagnostics' long-term growth prospects, emphasizing a strong fundamental backdrop and positive trends in healthcare and diagnostics.

Market Position

DGX has gained share in Physician Lab Services and in Hospital Lab Services, which it expects to continue, outgrowing the market in both segments.

Negative Factors

Investment Costs

DGX is still expecting to incur up to the prior $10M investment needed to improve regulatory compliance.

Premium Valuation

Shares trade at a premium to historical multiples, which is warranted given the defensive nature of the company and testing market.

Regulatory Challenges

The recent Congressional Budget Office scoring suggested challenges in delaying PAMA implementation, highlighting the necessity for speedy reforms.

Quest Diagnostics Business Overview & Revenue Model

Company Description

Quest 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 Money

Quest Diagnostics generates revenue primarily through the provision of diagnostic testing services. The company's revenue model is based on performing laboratory tests on specimens sent by healthcare providers, employers, and patients. Key revenue streams include routine clinical testing, which encompasses a wide variety of tests that are commonly prescribed by physicians. Additionally, Quest Diagnostics offers esoteric testing, which involves more complex and specialized tests that require advanced technologies. Another significant source of revenue is anatomic pathology services, which include the examination of tissue samples. The company also partners with hospitals and clinics to manage their laboratory operations, providing both in-house testing services and access to Quest's extensive network. Moreover, Quest Diagnostics benefits from strategic partnerships with healthcare providers and organizations, which help expand its service offerings and market reach.

Quest Diagnostics Financial Statement Overview

Summary

Quest Diagnostics demonstrates strong financial health characterized by solid profitability, efficient cash flow management, and a stable balance sheet. While revenue growth has shown inconsistency, margins remain robust. The company's leverage is manageable, though high debt levels warrant continuous monitoring. Overall, Quest Diagnostics is in a strong financial position with potential for sustained growth.

Income Statement

Quest Diagnostics shows strong profitability with a consistent Gross Profit Margin of around 32-34% and a stable Net Profit Margin of approximately 8-9%. The Revenue Growth Rate for TTM is 2.9%, indicating a positive growth trajectory, although it has been inconsistent in the past years. EBIT and EBITDA margins are healthy, reflecting efficient operations and cost management.

Balance Sheet

The company's balance sheet reveals a moderate Debt-to-Equity Ratio of 0.95 (TTM), indicating manageable leverage. Return on Equity (ROE) stands at 12.9% for TTM, showing profitable use of equity. The Equity Ratio of 43.9% suggests a stable financial structure, although high debt levels pose potential risks.

Cash Flow

Cash flow analysis indicates strong operational efficiency, with an Operating Cash Flow to Net Income Ratio of 1.67 for TTM, suggesting robust cash generation from operations. Free Cash Flow growth is substantial at 16.2% for TTM, but potential risk lies in the Free Cash Flow to Net Income Ratio of 1.18, which is healthy yet indicates room for improvement.

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
1.95B	1.89B	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
188.00M	549.00M	686.00M	315.00M	872.00M	1.16B
	Total Assets
15.80B	16.15B	14.02B	12.84B	13.61B	14.03B
	Total Debt
6.57B	7.09B	5.50B	4.62B	4.66B	4.66B
	Net Debt
6.38B	6.54B	4.81B	4.31B	3.79B	3.50B
	Total Liabilities
8.75B	9.26B	7.60B	6.83B	7.05B	7.13B
	Stockholders Equity
6.93B	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

• Technical Analysis Sentiment: Positive
• Last Price: 173.34
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 173.34 is below the 20-day moving average (MA) of 174.82, above the 50-day MA of 170.85, and above the 200-day MA of 160.11, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 50.21 is Neutral, neither overbought nor oversold. The STOCH value of 32.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DGX.

Quest Diagnostics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DGX	79 Outperform	$19.20B	21.91	13.35%	1.77%	9.38%	6.43%
IQV	76 Outperform	$24.28B	19.13	21.65%	―	2.84%	-0.16%
NTRA	67 Neutral	$21.54B	―	-18.66%	―	51.50%	53.23%
RVTY	65 Neutral	$10.83B	35.75	3.82%	0.31%	1.62%	78.53%
EXAS	61 Neutral	$10.87B	―	-36.89%	―	11.57%	-315.25%
Sector *	53 Neutral	$5.22B	3.32	-45.04%	2.83%	16.81%	-0.27%
ILMN	52 Neutral	$13.02B	―	-23.82%	―	-3.47%	25.55%

Quest Diagnostics Corporate Events

Quest Diagnostics Elects Directors at Annual Meeting

At the 2025 Annual Meeting of Stockholders held on May 15, 2025, Quest Diagnostics announced the election of several directors for terms expiring at the 2026 Annual Meeting. The meeting also saw the approval of executive officer compensation and the ratification of PricewaterhouseCoopers as the independent registered public accounting firm for 2025. However, a stockholder proposal regarding calling a special meeting of stockholders was not approved.

The most recent analyst rating on (DGX) stock is a Buy with a $177.00 price target. To see the full list of analyst forecasts on Quest Diagnostics stock, see the DGX Stock Forecast page.

Quest Diagnostics Unveils Growth Strategy at Investor Day

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.

Quest Diagnostics Outlines Growth Strategies at Investor Day

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.