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Quest Diagnostics Stock Gains From New Offerings, Customer Wins
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Quest Diagnostics (DGX - Free Report) has been gaining from its existing solid customer relationships, new customer wins, broad health plan access and advanced diagnostics offerings. The stock carries a Zacks Rank #2 (Buy) currently.
Factors Driving DGX Stock
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 the strength in physicians and hospitals.
The quarter also saw 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 of Brain Health's growth is the company’s Alzheimer's disease portfolio, featuring AD-Detect blood testing services and cerebrospinal fluid (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 to launch additional biomarkers later this year. Meanwhile, the acquisition of the cancer testing company Haystack Oncology has strategically placed DGX in the higher-growth clinical area of circulating tumor DNA and solid-tumor minimal residual disease (MRD) 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.
The stock has gained 18.8% in the past six months compared with the industry’s 11.9% rise. With the company currently focusing on core business expansion through innovations, new offerings and new customer wins, we expect the stock to continue its upward movement in the coming days.
Major Downsides for DGX
The transition away from COVID-19 testing presented challenges for the company in 2023. Revenues from testing volumes continued to nosedive, 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 comes 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%.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 2.5% to $1.23 in the past 30 days. Shares of the company have soared 156.5% in the past year compared with the industry’s 17.5% growth. TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 165.9% in the past year compared with the industry’s 17.6% growth. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Estimates for OrthoPediatrics’ 2024 loss per share have declined to 92 cents from 96 cents in the past 30 days. In the past year, shares of KIDS have lost 17.1% against the industry’s 20.8% growth. In the last reported quarter, KIDS delivered an earnings surprise of 25.81%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 26.81%.
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Quest Diagnostics Stock Gains From New Offerings, Customer Wins
Quest Diagnostics (DGX - Free Report) has been gaining from its existing solid customer relationships, new customer wins, broad health plan access and advanced diagnostics offerings. The stock carries a Zacks Rank #2 (Buy) currently.
Factors Driving DGX Stock
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 the strength in physicians and hospitals.
The quarter also saw 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 of Brain Health's growth is the company’s Alzheimer's disease portfolio, featuring AD-Detect blood testing services and cerebrospinal fluid (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 to launch additional biomarkers later this year. Meanwhile, the acquisition of the cancer testing company Haystack Oncology has strategically placed DGX in the higher-growth clinical area of circulating tumor DNA and solid-tumor minimal residual disease (MRD) testing.
Quest Diagnostics Incorporated Price
Quest Diagnostics Incorporated price | Quest Diagnostics Incorporated Quote
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.
The stock has gained 18.8% in the past six months compared with the industry’s 11.9% rise. With the company currently focusing on core business expansion through innovations, new offerings and new customer wins, we expect the stock to continue its upward movement in the coming days.
Major Downsides for DGX
The transition away from COVID-19 testing presented challenges for the company in 2023. Revenues from testing volumes continued to nosedive, 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 comes 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 better-ranked stocks in the broader medical space are TransMedics Group (TMDX - Free Report) , AxoGen (AXGN - Free Report) and OrthoPediatrics (KIDS - Free Report) . While TransMedics sports a Zacks Rank #1 (Strong Buy) at present, AxoGen and OrthoPediatrics carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 2.5% to $1.23 in the past 30 days. Shares of the company have soared 156.5% in the past year compared with the industry’s 17.5% growth. TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 165.9% in the past year compared with the industry’s 17.6% growth. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Estimates for OrthoPediatrics’ 2024 loss per share have declined to 92 cents from 96 cents in the past 30 days. In the past year, shares of KIDS have lost 17.1% against the industry’s 20.8% growth. In the last reported quarter, KIDS delivered an earnings surprise of 25.81%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 26.81%.