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What's in Store for Quest Diagnostics (DGX) in Q4 Earnings?

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Quest Diagnostics Incorporated (DGX - Free Report) is scheduled to report fourth-quarter 2021 earnings on Feb 3, before the opening bell.

In the last reported quarter, the company’s earnings of $3.96 outpaced the Zacks Consensus Estimate by 33.8%. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 12.25%.

Key Factors to Note

Quest Diagnostics has been benefiting from the two-pronged agenda to accelerate growth and drive operational excellence. In Q4, the company’s non-COVID base business might have registered a year-over-year sales rebound as the economy gradually returned to normalcy. However, just like the other industry players, the company might have faced a sequential slowdown in the base-business recovery process due to the massive spread of the extremely-contagious Omicron variant of COVID-19. With the rapid emergence of this strain globally, the non-elective hospital procedures have been once again cornered. Also, the hospital staffing problem is yet another major concern that might have played an adverse role in the base business performance. Still, year-over-year results might show a recovery from COVID-induced 2020 when the business was restricted by social distancing and supply issues.

In terms of COVID-19 testing revenues, the company is expected to report a dull first half of Q4 on gradual stabilization in testing demand. However, the latter half is expected to report an upturn with a considerable increase in daily case count. Keeping that in mind, the company is expected to have registered sequential growth within the COVID-19 diagnostic testing business in Q4. Positivity rates are expected to have increased in all geographies served by the company’s performing lab in this period. However, on a year-over-year basis, COVID-19 testing revenues might show a decline considering a very-strong year-ago comparable.

In January, the company came up with its preliminary financial results for the fourth quarter and full-year 2021. Quest Diagnostics noted that the fourth-quarter results reflect higher-than-expected demand for COVID-19 testing services. In contrast, base testing volumes remained steady and consistent with the company's earlier outlook shared on Oct 21, 2021.

Per the preliminary announcement, Quest Diagnostics anticipates fourth-quarter 2021 reported revenues at around $2.74 billion (down 9% from the year-ago $3.00 billion). Total volume, measured by the number of requisitions, is expected to increase around 1.3% in the fourth quarter of 2021 from the prior year. Total base testing volumes (excluding COVID-19 testing) are projected to increase by around 10% from the year-ago period, representing a pre-pandemic baseline.

COVID-19 testing volumes in the fourth quarter, which included around 7.9 million molecular tests and 0.7 million serology tests, are expected to decline from the prior-year quarter.

The company’s preliminary adjusted earnings per share (EPS) for the fourth quarter of 2021 totaled $3.33 (suggesting a drop of 34.5% from the year-ago $4.48).

Q4 Estimates

For fourth-quarter 2021, the Zacks Consensus Estimate for total revenues stands at $2.63 billion, indicating a 12.4% decline from the prior-year reported figure. The consensus estimate for earnings is pegged at $3.29, suggesting a year-over-year decline of 26.6%.

Earnings Whispers

Per our proven model, the stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a good chance of beating estimates. This is exactly the case as you can see:

Earnings ESP: Quest Diagnostics has an Earnings ESP of +6.94%. 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.

Other Stocks to Consider

Here are some medical stocks worth considering as these have the right combination of elements to beat on earnings this time around

Cara Therapeutics (CARA - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank of 1. Cara Therapeutics is slated to release fourth-quarter 2021 results on Feb 24.  

CARA’s earnings yield of 4.2% compares favorably with the industry’s 1.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank of 2. Henry Schein is slated to release fourth-quarter 2021 results on Feb 15. 

Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.9% compares favorably with the industry’s 4.1%.

Guardant Health (GH - Free Report) has an Earnings ESP of +9.45% and is a Zacks #2 Ranked stock.

Guardant Healthis slated to release fourth-quarter 2021 results on Feb 23. Guardant Health’s long-term earnings growth rate is estimated at 10.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.