Quest Diagnostics (DGX) is back in focus after reporting third quarter results that showed higher sales and net income year over year, raising full year guidance and pairing that with a new at home cervical cancer screening partnership.
Quest Diagnostics shares trade at US$238.93 after a 0.8% 1-day share price return and a 2.4% 7-day gain, while the stock is down 2.4% over 30 days yet still shows a 37.5% year to date share price return and triple digit 3-year total shareholder return. This suggests that recent earnings strength and the Waters partnership are contributing to a longer run build in momentum rather than a short-lived bounce.
Scan other healthcare leaders showing similar momentum and patient-focused models with our hand picked 37 healthcare AI stocks as Quest Diagnostics pushes further into tech enabled diagnostics and at home testing.
Quest Diagnostics now trades near record territory after a strong run and a guidance bump. Does that recent strength still leave enough upside in the valuation to reward new risk takers?
Most Popular Narrative: 3% Undervalued
Quest Diagnostics is priced at $238.93, compared with a widely followed fair value view around $247.40, which points to a small discount that depends heavily on how its newer growth engines play out.
The continuing shift toward preventive healthcare and wellness, supported by Quest Diagnostics’ roughly US$300 million consumer business that is growing at about 30% and is expected by management to grow more than 20% annually over the next 3 to 5 years with margins above the corporate average, is setting up a larger recurring revenue base and higher earnings contribution from cash-pay testing.
See why 20 investors see Quest Diagnostics as 3% undervalued.
Result: Fair Value of $247.40 (UNDERVALUED)
Still, the Quest Diagnostics story can be knocked off course if Medicare reimbursement cuts bite harder than expected or if wage inflation and automation spending outpace cost savings.
Find out about the key risks to this Quest Diagnostics narrative.
Next Steps
Mixed messages in the Quest Diagnostics story so far? If that balance of concerns and potential appeals to you, move quickly to review the 4 key rewards and 1 important warning sign.
Looking for more Quest Diagnostics style ideas?
If Quest Diagnostics fits how you think about risk and reward, it makes sense to widen your search now rather than wait for the next headline.
- Target resilience first by scanning a 31 resilient stocks with low risk scores that filters for businesses with smoother return profiles and more measured risk scores.
- Hunt for quality at a discount by reviewing a 21 high quality undiscovered gems built around stronger fundamentals that the market coverage has not fully embraced yet.
- Prioritise financial strength by using the list of solid balance sheet and fundamentals (25 results) to focus on companies pairing sturdier balance sheets with underlying fundamentals.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com