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Quest Diagnostics (DGX) to Report Q2 Earnings: What's In Store?
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Quest Diagnostics Incorporated (DGX - Free Report) is scheduled to report second-quarter 2022 earnings on Jul 21, before the opening bell.
In the last reported quarter, the company’s earnings of $3.22 surpassed the Zacks Consensus Estimate by 10.7%. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 13.66%.
Factors At Play
Quest Diagnostics is likely to have benefited from the continued sales rebound in the non-COVID base business as economic activities return to pre-pandemic levels.
The non-COVID base business is expected to have gained from the company’s efforts to expand value-based contracts with payers. In the last-reported Q1 earnings call, the company noted that roughly 30% of its health plan revenues are tied to value-based elements. The company expects these value-based contracts to align better with health plans, allowing it to gain share.
Quest Diagnostics’ notable partnerships with hospital health system leaders like Hackensack Meridian Health in New Jersey and Memorial Herman in Texas to help them implement their lab strategy are also likely to have added to growth momentum in the non-COVID base business. Apart from this, the company is expanding its diagnostic services portfolio. In this regard, we may note Quest Diagnostics’ recent collaboration with IRIS (Intelligent Retinal Imaging Systems) to offer diabetic retinal imaging services through designated Quest Diagnostics patient service centers across the United States. This collaboration will aid in screening patients for retinal assessment by a healthcare provider. The new service extends the Quest Diagnostics Extended Care portfolio of services which aims to facilitate access to care beyond traditional healthcare settings.
Quest Diagnostics Incorporated Price and EPS Surprise
However, the base business is likely to have faced continued inflationary headwinds as it did in the first quarter. To offset the inflationary pressures, Quest Diagnostics has been making several investments to strengthen advanced diagnostics capabilities within the base business.
In the to-be-reported second quarter, Quest Diagnostics’ COVID-19 testing revenues are expected to have declined year over year, owing to a robust year-ago comparison. Per its last-released media statement about COVID testing on Jul 7, the COVID-19 molecular diagnostic testing demand generally stabilized in June, after exhibiting a steady increase throughout May and a slight improvement during the last two weeks of April. This volatility in COVID-19 molecular diagnostic testing demand is likely to have significantly impacted sales in Q2. Also, sales performance is anticipated to be impacted by the reduced average reimbursement for COVID-19 molecular testing.
On a positive note, Quest Diagnostics’ partnerships with the Centers for Disease Control and Prevention's (CDC) on several public health testing and research initiatives related to SARS-CoV-2 variant sequencing and serology testing might have provided a favorable boost to the COVID-19 testing sales growth in Q2.
Q2 Estimates
For second-quarter 2022, the Zacks Consensus Estimate for total revenues is pegged at $2.28 billion, indicating a 10.5% decline from the prior-year reported figure. The consensus estimate for earnings is pegged at $2.15, suggesting a year-over-year decline of 32.4%.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates. This is exactly the case, as you can see:
Earnings ESP: Quest Diagnostics has an Earnings ESP of +5.37 %. 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 to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Merck has a long-term earnings growth rate of 10.1%. MRK’s earnings yield of 7.75% compares favorably with the industry’s 7.63%.
Alcon Inc. (ALC - Free Report) has an Earnings ESP of +5.07% and a Zacks Rank of #2. Alcon is expected to release second-quarter 2022 results on Aug 16.
Alcon's long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.41% compares with the industry’s (8.09%).
QuidelOrtho Corporation (QDEL - Free Report) currently has an Earnings ESP of +9.17% and a Zacks Rank of #2. QuidelOrtho is expected to release second-quarter fiscal 2022 results on Aug 4.
QDEL’s earnings yield of 14.83% compares favorably with the industry’s (-2.63%).
Image: Bigstock
Quest Diagnostics (DGX) to Report Q2 Earnings: What's In Store?
Quest Diagnostics Incorporated (DGX - Free Report) is scheduled to report second-quarter 2022 earnings on Jul 21, before the opening bell.
In the last reported quarter, the company’s earnings of $3.22 surpassed the Zacks Consensus Estimate by 10.7%. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 13.66%.
Factors At Play
Quest Diagnostics is likely to have benefited from the continued sales rebound in the non-COVID base business as economic activities return to pre-pandemic levels.
The non-COVID base business is expected to have gained from the company’s efforts to expand value-based contracts with payers. In the last-reported Q1 earnings call, the company noted that roughly 30% of its health plan revenues are tied to value-based elements. The company expects these value-based contracts to align better with health plans, allowing it to gain share.
Quest Diagnostics’ notable partnerships with hospital health system leaders like Hackensack Meridian Health in New Jersey and Memorial Herman in Texas to help them implement their lab strategy are also likely to have added to growth momentum in the non-COVID base business. Apart from this, the company is expanding its diagnostic services portfolio. In this regard, we may note Quest Diagnostics’ recent collaboration with IRIS (Intelligent Retinal Imaging Systems) to offer diabetic retinal imaging services through designated Quest Diagnostics patient service centers across the United States. This collaboration will aid in screening patients for retinal assessment by a healthcare provider. The new service extends the Quest Diagnostics Extended Care portfolio of services which aims to facilitate access to care beyond traditional healthcare settings.
Quest Diagnostics Incorporated Price and EPS Surprise
Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote
However, the base business is likely to have faced continued inflationary headwinds as it did in the first quarter. To offset the inflationary pressures, Quest Diagnostics has been making several investments to strengthen advanced diagnostics capabilities within the base business.
In the to-be-reported second quarter, Quest Diagnostics’ COVID-19 testing revenues are expected to have declined year over year, owing to a robust year-ago comparison. Per its last-released media statement about COVID testing on Jul 7, the COVID-19 molecular diagnostic testing demand generally stabilized in June, after exhibiting a steady increase throughout May and a slight improvement during the last two weeks of April. This volatility in COVID-19 molecular diagnostic testing demand is likely to have significantly impacted sales in Q2. Also, sales performance is anticipated to be impacted by the reduced average reimbursement for COVID-19 molecular testing.
On a positive note, Quest Diagnostics’ partnerships with the Centers for Disease Control and Prevention's (CDC) on several public health testing and research initiatives related to SARS-CoV-2 variant sequencing and serology testing might have provided a favorable boost to the COVID-19 testing sales growth in Q2.
Q2 Estimates
For second-quarter 2022, the Zacks Consensus Estimate for total revenues is pegged at $2.28 billion, indicating a 10.5% decline from the prior-year reported figure. The consensus estimate for earnings is pegged at $2.15, suggesting a year-over-year decline of 32.4%.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates. This is exactly the case, as you can see:
Earnings ESP: Quest Diagnostics has an Earnings ESP of +5.37 %. 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 to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Merck & Co., Inc. (MRK - Free Report) has an Earnings ESP of +7.18% and a Zacks Rank of #2. The company will release second-quarter 2022 results on Jul 28. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merck has a long-term earnings growth rate of 10.1%. MRK’s earnings yield of 7.75% compares favorably with the industry’s 7.63%.
Alcon Inc. (ALC - Free Report) has an Earnings ESP of +5.07% and a Zacks Rank of #2. Alcon is expected to release second-quarter 2022 results on Aug 16.
Alcon's long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.41% compares with the industry’s (8.09%).
QuidelOrtho Corporation (QDEL - Free Report) currently has an Earnings ESP of +9.17% and a Zacks Rank of #2. QuidelOrtho is expected to release second-quarter fiscal 2022 results on Aug 4.
QDEL’s earnings yield of 14.83% compares favorably with the industry’s (-2.63%).
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.