We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Quest Diagnostics (DGX) Hurt by Lower Testing Sales, Competition
Read MoreHide Full Article
Quest Diagnostics (DGX - Free Report) is challenged by declining COVID-19 testing revenues, unfavorable solvency and heightened competition. The stock carries a Zacks Rank #4 (Sell) currently.
As expected, Quest Diagnostics had a challenging 2023, given the gradual transition away from COVID-19 testing. Over the past few quarters, revenues from testing volumes have nosedived, plunging 80% in the fourth quarter of 2023. The company’s 2024 outlook indicates a minimum $175 million decline in COVID-19 revenues, partially offsetting the growth from the base business.
Added to this, the company’s solvency level remains a concern. At the end of the fourth quarter of 2023, the long-term debt was $4.41 billion, while the cash and cash equivalent balance was only $686 million. The current portion of the debt was also much higher at $303 million. A higher debt level induces higher interest payments, which comes along with the risk of failure to pay the same.
Further, Quest Diagnostics faces intense competition, primarily from LabCorp and other commercial laboratories and hospitals. While pricing is an important factor in choosing a testing lab, hospital-affiliated physicians expect a high level of service, including an accurate and rapid turnaround of testing results. As a result, Quest Diagnostics and other commercial labs compete with hospital-affiliated labs, primarily based on the quality of service.
On a positive note, Quest Diagnostics aims to accelerate revenue growth as part of its two-point business strategy. The company prioritizes delivering solutions that meet the evolving needs of its core customers, including physicians, hospitals and consumers. It also enables faster growth across all customer channels through advanced diagnostics with an intense focus on faster-growing clinical areas, including molecular genomics and oncology.
Throughout 2023, the company advanced its growth strategy with innovative testing solutions, new and expanded relationships with health systems and a robust pipeline of M&A and professional lab services opportunities. In 2024, Quest Diagnostics is set to launch its first MRD test following the acquisition of Haystack Oncology. The company also recently announced collaborations with the Rutgers Cancer Institute to use the test in their clinical study of early-stage triple-negative breast cancer.
Quest Diagnostics is also benefiting from strong volume growth across its base business (which refers to testing volumes, excluding COVID-19 testing). The collaborations with health plans, hospitals and physicians have increased demand for its services. The business is also benefiting from the continued return to care. The company boasts a robust pipeline of professional lab services and M&A opportunities, which, along with business strength, will help in the continued growth of base volume.
Estimates for DaVita’s 2024 earnings per share have advanced from $8.46 to $8.97 in the past 30 days. Shares of the company have risen 56.7% in the past year compared with the industry’s growth of 18.1%.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%. In the last reported quarter, it delivered an average earnings surprise of 22.2%.
Cardinal Health’sstock has risen 49.9% in the past year. Earnings estimates for CAH have increased from $6.91 to $7.28 in fiscal 2024 and increased from $7.76 to $8.03 in fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.7%.
Estimates for Insulet’s 2024 earnings per share have increased from $2.54 to $3.03 in the past 30 days. Shares of the company have decreased 42% in the past year against the industry’s growth of 11.7%.
PODD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 100.1%. In the last reported quarter, it delivered an average earnings surprise of 108.9%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Quest Diagnostics (DGX) Hurt by Lower Testing Sales, Competition
Quest Diagnostics (DGX - Free Report) is challenged by declining COVID-19 testing revenues, unfavorable solvency and heightened competition. The stock carries a Zacks Rank #4 (Sell) currently.
As expected, Quest Diagnostics had a challenging 2023, given the gradual transition away from COVID-19 testing. Over the past few quarters, revenues from testing volumes have nosedived, plunging 80% in the fourth quarter of 2023. The company’s 2024 outlook indicates a minimum $175 million decline in COVID-19 revenues, partially offsetting the growth from the base business.
Added to this, the company’s solvency level remains a concern. At the end of the fourth quarter of 2023, the long-term debt was $4.41 billion, while the cash and cash equivalent balance was only $686 million. The current portion of the debt was also much higher at $303 million. A higher debt level induces higher interest payments, which comes along with the risk of failure to pay the same.
Further, Quest Diagnostics faces intense competition, primarily from LabCorp and other commercial laboratories and hospitals. While pricing is an important factor in choosing a testing lab, hospital-affiliated physicians expect a high level of service, including an accurate and rapid turnaround of testing results. As a result, Quest Diagnostics and other commercial labs compete with hospital-affiliated labs, primarily based on the quality of service.
Quest Diagnostics Incorporated Price
Quest Diagnostics Incorporated price | Quest Diagnostics Incorporated Quote
On a positive note, Quest Diagnostics aims to accelerate revenue growth as part of its two-point business strategy. The company prioritizes delivering solutions that meet the evolving needs of its core customers, including physicians, hospitals and consumers. It also enables faster growth across all customer channels through advanced diagnostics with an intense focus on faster-growing clinical areas, including molecular genomics and oncology.
Throughout 2023, the company advanced its growth strategy with innovative testing solutions, new and expanded relationships with health systems and a robust pipeline of M&A and professional lab services opportunities. In 2024, Quest Diagnostics is set to launch its first MRD test following the acquisition of Haystack Oncology. The company also recently announced collaborations with the Rutgers Cancer Institute to use the test in their clinical study of early-stage triple-negative breast cancer.
Quest Diagnostics is also benefiting from strong volume growth across its base business (which refers to testing volumes, excluding COVID-19 testing). The collaborations with health plans, hospitals and physicians have increased demand for its services. The business is also benefiting from the continued return to care. The company boasts a robust pipeline of professional lab services and M&A opportunities, which, along with business strength, will help in the continued growth of base volume.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita (DVA - Free Report) , Cardinal Health (CAH - Free Report) and Insulet (PODD - Free Report) . DaVita presently sports a Zacks Rank #1 (Strong Buy), while Cardinal Health and Insulet carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for DaVita’s 2024 earnings per share have advanced from $8.46 to $8.97 in the past 30 days. Shares of the company have risen 56.7% in the past year compared with the industry’s growth of 18.1%.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%. In the last reported quarter, it delivered an average earnings surprise of 22.2%.
Cardinal Health’sstock has risen 49.9% in the past year. Earnings estimates for CAH have increased from $6.91 to $7.28 in fiscal 2024 and increased from $7.76 to $8.03 in fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.7%.
Estimates for Insulet’s 2024 earnings per share have increased from $2.54 to $3.03 in the past 30 days. Shares of the company have decreased 42% in the past year against the industry’s growth of 11.7%.
PODD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 100.1%. In the last reported quarter, it delivered an average earnings surprise of 108.9%.