Quest Diagnostics Incorporated (DGX Quick QuoteDGX - Free Report) entered into a research collaboration with Broad Clinical Labs — the expert in whole genome sequencing (WGS). The collaboration is intended to demonstrate the clinical value of WGS as a first-line genetic test for postnatal diagnosis of developmental delay disorders.

For investors’ note, Broad Clinical Labs is a pioneer in human whole genome sequencing, having sequenced more than 600,000 genomes as part of its aim to expedite the knowledge and diagnosis of human disease.

More on Collaboration

Through the partnership, Quest Diagnostics will offer de-identified data, such as phenotypic information (a person's observable qualities) and materials from blood, saliva and buccal swabs that it examined using CMA and other tests to check for developmental delays. In order to assess technique concordance, Broad Labs will apply WGS to the de-identified specimens.

The partnership will also investigate if WGS might offer insights into the causes of fragile X syndrome. WGS can rule out fragile X as a cause of developmental delay, unlike CMA or exome sequencing and indicate the necessity for further confirmatory testing in cases where data point to the possibility of fragile X as a cause.

Both companies intend to show that WGS can yield insights from a single blood test that is at least as clinically accurate as the several traditional tests that doctors routinely use to diagnose a patient.

Strategic Implications

WGS offers the potential to provide a new diagnostic paradigm in which a clinician might gain genetic insights earlier in the patient's diagnostic journey, avoiding many doctor visits and lab testing. Broad Labs is a pioneer in genetic science, and Quest Diagnostics is the best in large-scale laboratory testing, this collaboration is an ideal combination of both companies’ capabilities to assess the possibility of WGS to replace the current approach.

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Broad Labs and Quest Diagnostics’ research program involves the sharing of both phenotypic and genotypic data in order to improve the interpretation of genomic testing and understanding of developmental delay. Per management, collaboration between commercial laboratories and research institutions is critical for advancing the field of genetic testing and increasing utility and economic value.

Industry Prospects

Per a report by Grand View Research, the global whole genome sequencing market was valued at $1,645.2 million in 2022 and is expected to witness a CAGR of 20.06% from 2023 to 2030. Growth of the market can be attributed to the growing prevalence of genetic disorders and mutations that lead to cancer progression.

Other Notable Developments

In January 2024, Quest Diagnostics collaborated with Ultima Genomics, the developer of the revolutionary new ultra-high throughput sequencing architecture. Through the collaboration, the companies aim to improve patient access, affordability and outcomes by expanding the use of highly accurate, cost-efficient and high-volume whole genome sequencing in fast-growth areas, such as solid-tumor minimal residual disease (MRD) testing.

In November 2023, DGX announced a multi-pronged partnership with the precision immunology company Scipher Medicine to expand patient access to diagnostic services, advancing precision medicine for rheumatoid arthritis (RA). Through the collaboration, the company will provide advanced RNA extraction and next-generation sequencing services for Scipher's PrismRA test, which analyzes RA patients' molecular profiles to identify those unlikely to respond to TNF inhibitors.

Price Performance

In the past year, DGX’s shares have declined 5.3% against the industry’s rise of 24%.

Zacks Rank and Key Picks

Quest Diagnostics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK Quick QuoteSYK - Free Report) , Cencora, Inc. (COR Quick QuoteCOR - Free Report) and Cardinal Health (CAH Quick QuoteCAH - Free Report) .

Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.

Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.

COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.

Cardinal Health, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.

CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.