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Quest Diagnostics (DGX) Gains From Innovation, Customer Wins
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Quest Diagnostics (DGX - Free Report) is gaining from strong existing customer relationships, new customer wins, broad health plan access and advanced diagnostics offerings. The stock carries a Zacks Rank #2 (Buy) currently.
Quest Diagnostics has been experiencing robust volume growth in its core business (excluding COVID Testing), banking on the growth of new physician and hospital customers, a more favorable test mix with increased use of advanced diagnostics, continued strength in healthcare utilization and the ongoing return to care. Base clinical volumes jumped 3.2% in the second quarter of 2024 due to strength among physicians and hospitals.
The quarter also marked strong base business growth for Physician Lab Services, driven by overall market growth and share gains on new customer wins. Added to this, Quest Diagnostics delivered strong volume and revenue growth from its Medicare Advantage plans. Its strategies to offer high-quality, cost-efficient tests should continue to bring in more customers. With approximately 90% of health plan members in the United States having access to its laboratory services, the company's broad health plan access has been a key driver of its success in the physician channel.
Quest Diagnostics’ highly specialized Advanced Diagnostics services include molecular genomics and oncology tests such as germline testing to assess prenatal and hereditary genetic risks and somatic testing for tumor sequencing. These offerings have generated robust growth in recent quarters, particularly in brain health, women’s health, prenatal and hereditary genetics and advanced cardiometabolic health in the second quarter of 2024.
A key driver in Brain Health growth is the company’s Alzheimer's disease portfolio, featuring the AD-Detect blood testing services and the CSF Tests for diagnosing and monitoring. In April, the company added phosphorylated tau 217, or p-tau217 test, to the AD-Detect portfolio, with plans for launching additional biomarkers later this year.
Meanwhile, the acquisition of cancer testing company Haystack Oncology strategically placed the company in the higher-growth clinical area of ctDNA (Circulating tumor DNA) solid-tumor MRD (minimal residual disease) testing. Quest Diagnostics successfully validated its first MRD product in March 2024, with nearly 20 leading cancer institutions subscribing to its Haystack MRD Early Experience Program. The test is scheduled to have its nationwide launch later this year from the Oncology Center of Excellence in Lewisville, TX.
On the flip side, the transition away from COVID-19 testing presented challenges for the company. Revenues from testing volumes nosedived, plunging nearly 85% last year and affecting some key metrics’ performance. Although the company has stopped providing the COVID-19 revenue guidance, Quest Diagnostics’ 2024 outlook still indicates a $175 million decline in COVID-19 revenues, partially offsetting the growth from the base business.
The company’s solvency level remains a concern. At the end of the second quarter of 2024, long-term debt on the balance sheet was $3.82 billion, while the cash and cash equivalent balance was only $271 million. The current portion of the debt was much higher at $606 million. Moreover, a higher debt level induces higher interest payments, which come along with the risk of failure to pay the same. The times interest ratio, which indicates the company’s capacity to pay interest, declined 0.3% sequentially to 7.7%.
Intuitive Surgical reported second-quarter adjusted earnings per share (EPS) of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%.
Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
DaVita reported second-quarter 2024 adjusted earnings of $2.59, which surpassed the Zacks Consensus Estimate by 4.9%. Revenues of $3.19 billion topped the Zacks Consensus Estimate by 0.7%.
DVA has an estimated long-term earnings growth rate of 17.5% compared with the S&P 500’s 12.5%. The company surpassed earnings estimates in each of the trailing four quarters, the surprise being 2.34%.
Masimo shares have surged 13.2% in the past year. Estimates for the company’s earnings have increased from $3.63 to $3.83 for 2024 and from $3.97 to $4.20 for 2025 in the past 30 days.
MASI’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 14.6%. In the last reported quarter, it posted an earnings surprise of 11.7%.
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Quest Diagnostics (DGX) Gains From Innovation, Customer Wins
Quest Diagnostics (DGX - Free Report) is gaining from strong existing customer relationships, new customer wins, broad health plan access and advanced diagnostics offerings. The stock carries a Zacks Rank #2 (Buy) currently.
Quest Diagnostics has been experiencing robust volume growth in its core business (excluding COVID Testing), banking on the growth of new physician and hospital customers, a more favorable test mix with increased use of advanced diagnostics, continued strength in healthcare utilization and the ongoing return to care. Base clinical volumes jumped 3.2% in the second quarter of 2024 due to strength among physicians and hospitals.
The quarter also marked strong base business growth for Physician Lab Services, driven by overall market growth and share gains on new customer wins. Added to this, Quest Diagnostics delivered strong volume and revenue growth from its Medicare Advantage plans. Its strategies to offer high-quality, cost-efficient tests should continue to bring in more customers. With approximately 90% of health plan members in the United States having access to its laboratory services, the company's broad health plan access has been a key driver of its success in the physician channel.
Quest Diagnostics’ highly specialized Advanced Diagnostics services include molecular genomics and oncology tests such as germline testing to assess prenatal and hereditary genetic risks and somatic testing for tumor sequencing. These offerings have generated robust growth in recent quarters, particularly in brain health, women’s health, prenatal and hereditary genetics and advanced cardiometabolic health in the second quarter of 2024.
A key driver in Brain Health growth is the company’s Alzheimer's disease portfolio, featuring the AD-Detect blood testing services and the CSF Tests for diagnosing and monitoring. In April, the company added phosphorylated tau 217, or p-tau217 test, to the AD-Detect portfolio, with plans for launching additional biomarkers later this year.
Meanwhile, the acquisition of cancer testing company Haystack Oncology strategically placed the company in the higher-growth clinical area of ctDNA (Circulating tumor DNA) solid-tumor MRD (minimal residual disease) testing. Quest Diagnostics successfully validated its first MRD product in March 2024, with nearly 20 leading cancer institutions subscribing to its Haystack MRD Early Experience Program. The test is scheduled to have its nationwide launch later this year from the Oncology Center of Excellence in Lewisville, TX.
Quest Diagnostics Incorporated Price
Quest Diagnostics Incorporated price | Quest Diagnostics Incorporated Quote
On the flip side, the transition away from COVID-19 testing presented challenges for the company. Revenues from testing volumes nosedived, plunging nearly 85% last year and affecting some key metrics’ performance. Although the company has stopped providing the COVID-19 revenue guidance, Quest Diagnostics’ 2024 outlook still indicates a $175 million decline in COVID-19 revenues, partially offsetting the growth from the base business.
The company’s solvency level remains a concern. At the end of the second quarter of 2024, long-term debt on the balance sheet was $3.82 billion, while the cash and cash equivalent balance was only $271 million. The current portion of the debt was much higher at $606 million. Moreover, a higher debt level induces higher interest payments, which come along with the risk of failure to pay the same. The times interest ratio, which indicates the company’s capacity to pay interest, declined 0.3% sequentially to 7.7%.
Key Picks
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , DaVita Inc. (DVA - Free Report) and Masimo (MASI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical reported second-quarter adjusted earnings per share (EPS) of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%.
Intuitive Surgical has a long-term earnings growth rate of 16.1% for 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
DaVita reported second-quarter 2024 adjusted earnings of $2.59, which surpassed the Zacks Consensus Estimate by 4.9%. Revenues of $3.19 billion topped the Zacks Consensus Estimate by 0.7%.
DVA has an estimated long-term earnings growth rate of 17.5% compared with the S&P 500’s 12.5%. The company surpassed earnings estimates in each of the trailing four quarters, the surprise being 2.34%.
Masimo shares have surged 13.2% in the past year. Estimates for the company’s earnings have increased from $3.63 to $3.83 for 2024 and from $3.97 to $4.20 for 2025 in the past 30 days.
MASI’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 14.6%. In the last reported quarter, it posted an earnings surprise of 11.7%.