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Quest Diagnostics (DGX) to Post Q4 Earnings: What's in Store?
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Quest Diagnostics (DGX - Free Report) is set to release fourth-quarter 2023 results on Feb 1 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.22 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 1.37%. Quest Diagnostics beat earnings estimates in each of the trailing four quarters, the average surprise being 3.07%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Base Business
In the fourth quarter of 2023, we assume the company to have maintained its robust core base business performance. This may be substantially driven by growth in the physician and hospital channels and solid growth in consumer channels.
Earlier this year, DGX successfully completed negotiations for all its strategic health plan renewals that were scheduled. These collaborations may have helped the company capitalize on growth opportunities in the to-be-reported quarter, thus contributing to revenues. Most recently, DGX entered into a series of partnerships, including an expanded public health research collaboration with CDC (Centers for Disease Control and Prevention) to assess the burden of hepatitis C virus in the United States.
Quest Diagnostics Incorporated Price and EPS Surprise
In addition, the productivity of DGX’s base business is likely to have improved sequentially in the fourth quarter of 2023 and year over year. The company’s highly specialized advanced diagnostics offerings, such as molecular genomics and oncology tests, are expected to have played a pivotal role in enabling faster growth across customer channels. This may have also benefited the company’s top line in the to-be-reported quarter.
In terms of operational and productivity improvements, we are upbeat about Quest Diagnostics’ progress toward achieving a 3% annual productivity savings target under the Invigorate initiative. DGX may have strategically deployed automation and AI to improve quality, efficiency and service across the business.
The Physician Lab Services is likely to have performed well, driven by the strength in cardiometabolic and general health and wellness testing businesses. DGX’s strong relationships with health plans may have significantly contributed to its revenues in the fourth quarter of 2023 compared to traditional health plan contracts.
In Hospital Lab Services, we assume the company to have witnessed solid base business growth in the to-be-reported quarter. This is expected to have been driven by the continued progress in the recent professional lab service relationships, including Northern Light Health, Lee Health and Tower Health, and strength in the hospital reference testing business.
Across Consumer Health, the performance of the consumer-initiated testing channel is expected to have helped DGX generate solid base business revenue growth in the fourth quarter of 2023. As seen previously, the consumer channel is likely to have been profitable in the to-be-reported quarter due to the continuing demand for its expanded test menu, including STIs, comprehensive health and tuberculosis blood testing. All these developments are likely to have a positive impact on the company’s overall revenues in the fourth quarter of 2023.
In addition, multiple clinical areas, including neurology, immunology, cardiometabolic and infectious diseases, are expected to have given a robust performance in the to-be-reported quarter. Within the Alzheimer's disease portfolio, DGX is likely to have witnessed strong demand for its Alzheimer's cerebral spinal fluid panel.
Moreover, significant growth in women's reproductive health, particularly in non-invasive prenatal and carrier screening tests, is likely to have been observed. Further, gaining the FDA’s breakthrough designation for the AAV (adeno-associated virus), companion diagnostic may have helped the company build further collaborations with other biopharmaceutical companies. These advancements are likely to have boosted DGX’s revenues in the fourth quarter of 2023.
DGX is expected to have made further progress in the integration of Haystack Oncology in the to-be-reported quarter. The acquisition has positioned the company to enter the high-growth liquid biopsy area of minimal residual disease or MRD testing. To address the changing drug epidemic, DGX recently unveiled a new test panel that tests for 88 compounds of novel psychoactive substances.
Our model projects Quest Diagnostics’ Base business revenues to improve 3.1% year over year in the fourth quarter of 2023.
COVID-19 Testing Service
For the past few quarters, Quest Diagnostics’ COVID-19 testing revenues have been significantly dragging its overall top line. We assume the downward trend to have continued in the fourth quarter of 2023 as well. Further, the reduction in revenues may have negatively affected the operational results of the Diagnostic Information Services.
Total volumes, as measured by the number of requisitions, may have declined in the to-be-reported quarter, while revenue per requisition is also likely to have decreased due to lower COVID-19 molecular volumes. The company anticipates delivering approximately $200 million in COVID-19 testing revenues for the full year 2023.
Going by our model, COVID-19 testing revenues are projected to have declined 92.4% year over year in the fourth quarter of 2023.
Q4 Estimates
For the fourth quarter of 2023, the Zacks Consensus Estimate for Quest Diagnostics’ revenues is pegged at $2.25 billion, suggesting a decline of 3.7% from the year-ago reported figure.
The Zacks Consensus Estimate for the company’s fourth-quarter EPS of $2.14 indicates an 8.1% rise from the year-ago reported figure.
What Our Model Suggests
Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: Quest Diagnostics has an Earnings ESP of -0.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter:
SiBone has a long-term expected earnings growth rate of 15.2%. SIBN surpassed earnings in each of the trailing four quarters, the average being 24.21%.
RxSight (RXST - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #2. The company is expected to release fourth-quarter 2023 results on Mar 4.
RXST has an expected long-term earnings growth rate of 21%. The company surpassed earnings in each of the trailing four quarters, the average being 18.25%.
Masimo (MASI - Free Report) currently has an Earnings ESP of +9.51% and a Zacks Rank #2. The company is expected to release its fourth-quarter 2023 results on Feb 27.
MASI has an earnings yield of 2.69% against the industry’s -5.04%. In the last reported quarter, the company delivered an earnings surprise of 6.78%.
Image: Bigstock
Quest Diagnostics (DGX) to Post Q4 Earnings: What's in Store?
Quest Diagnostics (DGX - Free Report) is set to release fourth-quarter 2023 results on Feb 1 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.22 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 1.37%. Quest Diagnostics beat earnings estimates in each of the trailing four quarters, the average surprise being 3.07%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Base Business
In the fourth quarter of 2023, we assume the company to have maintained its robust core base business performance. This may be substantially driven by growth in the physician and hospital channels and solid growth in consumer channels.
Earlier this year, DGX successfully completed negotiations for all its strategic health plan renewals that were scheduled. These collaborations may have helped the company capitalize on growth opportunities in the to-be-reported quarter, thus contributing to revenues. Most recently, DGX entered into a series of partnerships, including an expanded public health research collaboration with CDC (Centers for Disease Control and Prevention) to assess the burden of hepatitis C virus in the United States.
Quest Diagnostics Incorporated Price and EPS Surprise
Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote
In addition, the productivity of DGX’s base business is likely to have improved sequentially in the fourth quarter of 2023 and year over year. The company’s highly specialized advanced diagnostics offerings, such as molecular genomics and oncology tests, are expected to have played a pivotal role in enabling faster growth across customer channels. This may have also benefited the company’s top line in the to-be-reported quarter.
In terms of operational and productivity improvements, we are upbeat about Quest Diagnostics’ progress toward achieving a 3% annual productivity savings target under the Invigorate initiative. DGX may have strategically deployed automation and AI to improve quality, efficiency and service across the business.
The Physician Lab Services is likely to have performed well, driven by the strength in cardiometabolic and general health and wellness testing businesses. DGX’s strong relationships with health plans may have significantly contributed to its revenues in the fourth quarter of 2023 compared to traditional health plan contracts.
In Hospital Lab Services, we assume the company to have witnessed solid base business growth in the to-be-reported quarter. This is expected to have been driven by the continued progress in the recent professional lab service relationships, including Northern Light Health, Lee Health and Tower Health, and strength in the hospital reference testing business.
Across Consumer Health, the performance of the consumer-initiated testing channel is expected to have helped DGX generate solid base business revenue growth in the fourth quarter of 2023. As seen previously, the consumer channel is likely to have been profitable in the to-be-reported quarter due to the continuing demand for its expanded test menu, including STIs, comprehensive health and tuberculosis blood testing. All these developments are likely to have a positive impact on the company’s overall revenues in the fourth quarter of 2023.
In addition, multiple clinical areas, including neurology, immunology, cardiometabolic and infectious diseases, are expected to have given a robust performance in the to-be-reported quarter. Within the Alzheimer's disease portfolio, DGX is likely to have witnessed strong demand for its Alzheimer's cerebral spinal fluid panel.
Moreover, significant growth in women's reproductive health, particularly in non-invasive prenatal and carrier screening tests, is likely to have been observed. Further, gaining the FDA’s breakthrough designation for the AAV (adeno-associated virus), companion diagnostic may have helped the company build further collaborations with other biopharmaceutical companies. These advancements are likely to have boosted DGX’s revenues in the fourth quarter of 2023.
DGX is expected to have made further progress in the integration of Haystack Oncology in the to-be-reported quarter. The acquisition has positioned the company to enter the high-growth liquid biopsy area of minimal residual disease or MRD testing. To address the changing drug epidemic, DGX recently unveiled a new test panel that tests for 88 compounds of novel psychoactive substances.
Our model projects Quest Diagnostics’ Base business revenues to improve 3.1% year over year in the fourth quarter of 2023.
COVID-19 Testing Service
For the past few quarters, Quest Diagnostics’ COVID-19 testing revenues have been significantly dragging its overall top line. We assume the downward trend to have continued in the fourth quarter of 2023 as well. Further, the reduction in revenues may have negatively affected the operational results of the Diagnostic Information Services.
Total volumes, as measured by the number of requisitions, may have declined in the to-be-reported quarter, while revenue per requisition is also likely to have decreased due to lower COVID-19 molecular volumes. The company anticipates delivering approximately $200 million in COVID-19 testing revenues for the full year 2023.
Going by our model, COVID-19 testing revenues are projected to have declined 92.4% year over year in the fourth quarter of 2023.
Q4 Estimates
For the fourth quarter of 2023, the Zacks Consensus Estimate for Quest Diagnostics’ revenues is pegged at $2.25 billion, suggesting a decline of 3.7% from the year-ago reported figure.
The Zacks Consensus Estimate for the company’s fourth-quarter EPS of $2.14 indicates an 8.1% rise from the year-ago reported figure.
What Our Model Suggests
Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: Quest Diagnostics has an Earnings ESP of -0.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter:
SiBone (SIBN - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #1. The company is expected to release fourth-quarter 2023 results on Feb 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
SiBone has a long-term expected earnings growth rate of 15.2%. SIBN surpassed earnings in each of the trailing four quarters, the average being 24.21%.
RxSight (RXST - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #2. The company is expected to release fourth-quarter 2023 results on Mar 4.
RXST has an expected long-term earnings growth rate of 21%. The company surpassed earnings in each of the trailing four quarters, the average being 18.25%.
Masimo (MASI - Free Report) currently has an Earnings ESP of +9.51% and a Zacks Rank #2. The company is expected to release its fourth-quarter 2023 results on Feb 27.
MASI has an earnings yield of 2.69% against the industry’s -5.04%. In the last reported quarter, the company delivered an earnings surprise of 6.78%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.