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) Hits a 52-Week High: What's Driving It?
Read MoreHide Full Article
Quest Diagnostics Incorporated (DGX - Free Report) scaled a new 52-week high of $165.37 on Dec 14 before closing the session marginally lower at $164.43.
The company’s shares have charted a solid trajectory in recent times, appreciating 35.9% over the past year versus the 42.5% fall of the industry it belongs to and 26.9% surge of the S&P 500 composite.
Over the past five years, the company registered earnings growth of 18.8%, ahead of the industry’s 17.3% rise and the S&P 500’s 2.8% increase. The company surpassed earnings estimates in the trailing three quarters and missed in one, delivering an average surprise of 12.3%.
Image Source: Zacks Investment Research
Quest Diagnostics is well poised for growth in the coming quarters, backed by strength in its base business. The company ended the third quarter of 2021 with better-than-expected results. A surge in COVID-19 testing volume buoys optimism for the company. Expansion of non-clinical COVID-19 testing offerings appears promising. A strong solvency position is an added advantage.
Key Drivers
Q3 Upsides: Quest Diagnostics reported better-than-expected third-quarter adjusted earnings and revenues. The company noted that its base business continued to improve sequentially in the third quarter signifying the ongoing recovery trend of the industry. In COVID-19 testing, molecular diagnostic testing volumes increased sequentially in the third quarter, driven by the massive spread of the Delta variant. The raised guidance for 2021, based on higher-than-anticipated COVID-19 volumes and the continued rebound in base business, is indicative of a bullish trend.
Base Volume Improves: Sequential growth in Quest Diagnostics’ base testing volumes or base business in the third quarter despite the COVID-19 resurgence raises our optimism. The company noted that, base business volumes rebounded in September following a modest softening in August. Base Diagnostic Information Services revenue grew approximately 6% in the reported quarter (up nearly 2% excluding acquisitions). Total base testing volumes benefited from the company’s new professional lab services (PLS) contracts that have ramped over the last year.
COVID-19 Test Demand Regains: The market is upbeat about Quest Diagnostics’ third-quarter COVID-19 testing volume gains. COVID-19 testing volumes expanded throughout the summer on a sequential basis in the wake of the massive spread of the lethal Delta variant. The company reported approximately 7.6 million molecular tests and nearly 700,000 serology tests in the quarter under review. The company also performed an average of 83,000 COVID-19 molecular tests and maintained strong average turnaround times of approximately one day for most specimens throughout the surge. Quest Diagnostics is currently expanding its non-clinical COVID-19 testing offerings to support the return to school, office, travel and entertainment.
Stable Solvency Position: Quest Diagnostics ended the third quarter of 2021 with cash and cash equivalents of $987 million. Meanwhile, total debt came up to $4.01 billion, much higher than the cash and cash equivalent level. However, it is worth mentioning that the company has a short-term payable debt of $1 million on its balance sheet. This can be considered positive for the company when the coronavirus mayhem has forced the corporate sector to halt production and supply.
Downsides
Of late, a number of factors have been hampering Quest Diagnostics' rally.
A year-over-year decline in revenues and adjusted earnings in the third quarter, owing to an unfavorable comparison with the stellar year-ago quarter, does not bode well. A weak margin scenario during the reported quarter also raises apprehension. Further, given a difficult macro-economic situation and pricing, volume pressure constitutes the primary risk for Quest Diagnostics.
Zacks Rank and Key Picks
Currently, Quest Diagnostics carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Varex Imaging Corporation (VREX - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 60.2% versus the 58% industry decline.
Varex, carrying a Zacks Rank #1, has a long-term earnings growth rate of 5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 115.3%.
Varex has outperformed the industry it belongs to in the past year. VREX has gained 63.4% versus the industry’s 4% fall.
West Pharmaceutical, sporting a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed its industry over the past year. WST has rallied 60.1% versus the industry’s 13.5% rise.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Quest Diagnostics (DGX) Hits a 52-Week High: What's Driving It?
Quest Diagnostics Incorporated (DGX - Free Report) scaled a new 52-week high of $165.37 on Dec 14 before closing the session marginally lower at $164.43.
The company’s shares have charted a solid trajectory in recent times, appreciating 35.9% over the past year versus the 42.5% fall of the industry it belongs to and 26.9% surge of the S&P 500 composite.
Over the past five years, the company registered earnings growth of 18.8%, ahead of the industry’s 17.3% rise and the S&P 500’s 2.8% increase. The company surpassed earnings estimates in the trailing three quarters and missed in one, delivering an average surprise of 12.3%.
Quest Diagnostics is well poised for growth in the coming quarters, backed by strength in its base business. The company ended the third quarter of 2021 with better-than-expected results. A surge in COVID-19 testing volume buoys optimism for the company. Expansion of non-clinical COVID-19 testing offerings appears promising. A strong solvency position is an added advantage.
Key Drivers
Q3 Upsides: Quest Diagnostics reported better-than-expected third-quarter adjusted earnings and revenues. The company noted that its base business continued to improve sequentially in the third quarter signifying the ongoing recovery trend of the industry. In COVID-19 testing, molecular diagnostic testing volumes increased sequentially in the third quarter, driven by the massive spread of the Delta variant. The raised guidance for 2021, based on higher-than-anticipated COVID-19 volumes and the continued rebound in base business, is indicative of a bullish trend.
Base Volume Improves: Sequential growth in Quest Diagnostics’ base testing volumes or base business in the third quarter despite the COVID-19 resurgence raises our optimism. The company noted that, base business volumes rebounded in September following a modest softening in August. Base Diagnostic Information Services revenue grew approximately 6% in the reported quarter (up nearly 2% excluding acquisitions). Total base testing volumes benefited from the company’s new professional lab services (PLS) contracts that have ramped over the last year.
COVID-19 Test Demand Regains: The market is upbeat about Quest Diagnostics’ third-quarter COVID-19 testing volume gains. COVID-19 testing volumes expanded throughout the summer on a sequential basis in the wake of the massive spread of the lethal Delta variant. The company reported approximately 7.6 million molecular tests and nearly 700,000 serology tests in the quarter under review. The company also performed an average of 83,000 COVID-19 molecular tests and maintained strong average turnaround times of approximately one day for most specimens throughout the surge. Quest Diagnostics is currently expanding its non-clinical COVID-19 testing offerings to support the return to school, office, travel and entertainment.
Stable Solvency Position: Quest Diagnostics ended the third quarter of 2021 with cash and cash equivalents of $987 million. Meanwhile, total debt came up to $4.01 billion, much higher than the cash and cash equivalent level. However, it is worth mentioning that the company has a short-term payable debt of $1 million on its balance sheet. This can be considered positive for the company when the coronavirus mayhem has forced the corporate sector to halt production and supply.
Downsides
Of late, a number of factors have been hampering Quest Diagnostics' rally.
A year-over-year decline in revenues and adjusted earnings in the third quarter, owing to an unfavorable comparison with the stellar year-ago quarter, does not bode well. A weak margin scenario during the reported quarter also raises apprehension. Further, given a difficult macro-economic situation and pricing, volume pressure constitutes the primary risk for Quest Diagnostics.
Zacks Rank and Key Picks
Currently, Quest Diagnostics carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Varex Imaging Corporation (VREX - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 60.2% versus the 58% industry decline.
Varex, carrying a Zacks Rank #1, has a long-term earnings growth rate of 5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 115.3%.
Varex has outperformed the industry it belongs to in the past year. VREX has gained 63.4% versus the industry’s 4% fall.
West Pharmaceutical, sporting a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed its industry over the past year. WST has rallied 60.1% versus the industry’s 13.5% rise.