Jefferies Sees Upside Potential for Quest Diagnostics with Strong Growth Drivers

Quest Diagnostics Incorporated, listed as NYSE:DGX, is a leading provider in the medical diagnostics industry, specifically within the Zacks Medical - Outpatient and Home Healthcare sector. The company is known for its comprehensive diagnostic testing services, which are crucial for patient care and medical decision-making.

Quest Diagnostics competes with other major players in the healthcare diagnostics field, striving to maintain its position through consistent performance and innovation. On July 22, 2025, DGX is scheduled to release its quarterly earnings, with Wall Street anticipating earnings per share (EPS) of $2.57 and revenue of approximately $2.73 billion. Historically, Quest Diagnostics has a strong track record of surpassing earnings estimates, which makes it a promising candidate for continuing this trend.

In the last two quarters, DGX exceeded earnings estimates by an average of 2.31%, showcasing its ability to outperform market expectations. In the most recent quarter, DGX reported earnings of $2.21 per share, surpassing the Zacks Consensus Estimate of $2.15 per share, resulting in a 2.79% surprise. The previous quarter also saw DGX outperform expectations, with earnings of $2.23 per share against an expected $2.19 per share, achieving a 1.83% surprise. This consistent performance positions DGX favorably for potentially beating estimates again in its upcoming earnings report. DGX's financial metrics provide further insight into its market valuation and financial health.

The company has a price-to-earnings (P/E) ratio of approximately 20.65, indicating how much investors are willing to pay for each dollar of earnings. Its price-to-sales ratio stands at about 1.83, reflecting the market's valuation of its revenue. Additionally, the enterprise value to sales ratio is around 2.46, which considers the company's total valuation in relation to its sales. Quest Diagnostics also maintains a solid financial position with an earnings yield of about 4.84%, which indicates the return on investment for shareholders. The debt-to-equity ratio is approximately 0.95, showing a balanced approach to financing its assets. Furthermore, the current ratio of about 1.44 suggests that DGX is well-positioned to cover its short-term liabilities with its short-term assets, highlighting its financial stability.

Quest Diagnostics (NYSE:DGX) shares rose more than 1% intra-day today after Morgan Stanley upgraded the company to Overweight from Equalweight, raising its price target to $172 from $145. The upgrade reflected increased confidence in Quest’s medium- to long-term growth prospects and its ability to sustain momentum in a favorable utilization environment heading into 2025.

Previously cautious on Quest’s post-COVID recovery, Morgan Stanley acknowledged improved clarity around the company’s trajectory. With robust healthcare utilization trends persisting across the sector, Quest appeared well-positioned to benefit, particularly given its relative insulation from potential election-related risks.

Although Quest had yet to provide official 2025 guidance, management had reaffirmed its long-term growth targets. The company anticipates approximately 3% organic revenue growth annually through 2026, in line with its strategic goals. Additional tailwinds include high-single-digit earnings growth, margin expansion of 75–150 basis points, and incremental contributions from mergers and acquisitions, estimated at 1–2% annually. Combined, these factors point to a mid-single-digit revenue compound annual growth rate and sustained earnings improvement.

With favorable trends supporting its core business and an encouraging outlook for margins and earnings, Quest Diagnostics appears well-poised for continued growth and shareholder value creation in the coming years.

Quest Diagnostics (NYSE:DGX) shares rose more than 1% intra-day today after Morgan Stanley upgraded the company to Overweight from Equalweight, raising its price target to $172 from $145. The upgrade reflected increased confidence in Quest’s medium- to long-term growth prospects and its ability to sustain momentum in a favorable utilization environment heading into 2025.

Previously cautious on Quest’s post-COVID recovery, Morgan Stanley acknowledged improved clarity around the company’s trajectory. With robust healthcare utilization trends persisting across the sector, Quest appeared well-positioned to benefit, particularly given its relative insulation from potential election-related risks.

Although Quest had yet to provide official 2025 guidance, management had reaffirmed its long-term growth targets. The company anticipates approximately 3% organic revenue growth annually through 2026, in line with its strategic goals. Additional tailwinds include high-single-digit earnings growth, margin expansion of 75–150 basis points, and incremental contributions from mergers and acquisitions, estimated at 1–2% annually. Combined, these factors point to a mid-single-digit revenue compound annual growth rate and sustained earnings improvement.

With favorable trends supporting its core business and an encouraging outlook for margins and earnings, Quest Diagnostics appears well-poised for continued growth and shareholder value creation in the coming years.

Quest Diagnostics (NYSE:DGX) was initiated by Jefferies with a Buy rating and a price target of $185. Despite revenue still trailing the pandemic-era peak, the analysts highlighted a promising trajectory for growth fueled by strategic pricing, new contract wins, and industry consolidation.

Quest Diagnostics’ year-to-date performance signals a clear pathway to not only recover but surpass pre-pandemic revenue levels in the coming years. Recent contracts with Elevance and Sentara Health, along with sustained pricing power, are expected to drive mid-single-digit revenue growth through 2026.

The company’s valuation, trading at approximately 11.5x EBITDA, sits above its 10-year average but still reflects a notable 24% discount to the S&P 500. Jefferies pointed to several factors that could narrow this gap, including the impact of delayed PAMA regulations, regional expansion through acquisitions such as LifeLabs, and growth opportunities in oncology diagnostics, specifically the Haystack platform.

Mergers and acquisitions are expected to contribute over 2% annual growth through 2026, though execution remains a potential risk. However, continued success in outreach lab acquisitions and a focus on industry consolidation position Quest Diagnostics as a key player poised for upward revaluation.

With a combination of strategic initiatives and industry tailwinds, Quest Diagnostics appears set to unlock significant growth and shareholder value in the years ahead.

• Quest Diagnostics Incorporated (NYSE:DGX) reported earnings per share (EPS) of $5.72, significantly surpassing market expectations.
• The company's revenue reached approximately $2.49 billion, beating the estimated $2.42 billion.
• Quest Diagnostics has adjusted its 2024 profit forecast to a range of $8.85 to $8.95 per share, with a full-year revenue forecast between $9.80 billion and $9.85 billion.

Quest Diagnostics Incorporated, listed as NYSE:DGX, is a leading provider of diagnostic information services. The company specializes in laboratory testing and related services, catering to a wide range of healthcare needs. It competes with other major players in the healthcare diagnostics industry, such as LabCorp. On October 22, 2024, DGX reported impressive financial results, significantly surpassing market expectations.

DGX reported earnings per share (EPS) of $5.72, far exceeding the estimated $2.26. This strong performance was reflected in the company's revenue, which reached approximately $2.49 billion, surpassing the estimated $2.42 billion. The robust results were driven by the Diagnostic Information Services (DIS) business and recent acquisitions, as highlighted by Zacks.

The company's stock price rose following the earnings announcement, reaching multi-month highs. DGX shares increased by nearly 2% in pre-market trading. The adjusted EPS for the quarter was $2.30, beating the Zacks Consensus Estimate by 1.8% and improving by 3.6% from the previous year. GAAP earnings were $1.99 per share, marking a 1.5% increase from the same period last year.

Quest Diagnostics has adjusted its 2024 profit forecast to a range of $8.85 to $8.95 per share, slightly narrowing from its previous estimate. The company also raised its full-year revenue forecast to between $9.80 billion and $9.85 billion, exceeding earlier projections. This revised outlook considers the impact of its acquisition of LifeLabs and the effects of Hurricane Milton.

The company's financial metrics provide further insight into its performance. DGX has a price-to-earnings (P/E) ratio of approximately 13.92 and a price-to-sales ratio of about 1.84. The enterprise value to sales ratio is around 2.49, while the enterprise value to operating cash flow ratio is approximately 16.99. The debt-to-equity ratio is about 1.02, and the current ratio is around 1.25, indicating a solid financial position.

• Quest Diagnostics Incorporated (NYSE:DGX) reported earnings per share (EPS) of $5.72, significantly surpassing market expectations.
• The company's revenue reached approximately $2.49 billion, beating the estimated $2.42 billion.
• Quest Diagnostics has adjusted its 2024 profit forecast to a range of $8.85 to $8.95 per share, with a full-year revenue forecast between $9.80 billion and $9.85 billion.

Quest Diagnostics Incorporated, listed as NYSE:DGX, is a leading provider of diagnostic information services. The company specializes in laboratory testing and related services, catering to a wide range of healthcare needs. It competes with other major players in the healthcare diagnostics industry, such as LabCorp. On October 22, 2024, DGX reported impressive financial results, significantly surpassing market expectations.

DGX reported earnings per share (EPS) of $5.72, far exceeding the estimated $2.26. This strong performance was reflected in the company's revenue, which reached approximately $2.49 billion, surpassing the estimated $2.42 billion. The robust results were driven by the Diagnostic Information Services (DIS) business and recent acquisitions, as highlighted by Zacks.

The company's stock price rose following the earnings announcement, reaching multi-month highs. DGX shares increased by nearly 2% in pre-market trading. The adjusted EPS for the quarter was $2.30, beating the Zacks Consensus Estimate by 1.8% and improving by 3.6% from the previous year. GAAP earnings were $1.99 per share, marking a 1.5% increase from the same period last year.

Quest Diagnostics has adjusted its 2024 profit forecast to a range of $8.85 to $8.95 per share, slightly narrowing from its previous estimate. The company also raised its full-year revenue forecast to between $9.80 billion and $9.85 billion, exceeding earlier projections. This revised outlook considers the impact of its acquisition of LifeLabs and the effects of Hurricane Milton.

The company's financial metrics provide further insight into its performance. DGX has a price-to-earnings (P/E) ratio of approximately 13.92 and a price-to-sales ratio of about 1.84. The enterprise value to sales ratio is around 2.49, while the enterprise value to operating cash flow ratio is approximately 16.99. The debt-to-equity ratio is about 1.02, and the current ratio is around 1.25, indicating a solid financial position.