Quest Diagnostics Hits a 52-Week High on Solid Prospects
Share price of Madison, NJ-based Quest Diagnostics, Inc. DGX scaled a new 52-week high of $108.52 on May 16, eventually closing a bit lower at $108.14. The company gained 40% over the past one year, much better than the S&P 500’s gain of 14.6% over the same period. The stock has a market cap of $14.79 billion.
Over the past one year, Quest Diagnostics has steadily outshined the Zacks categorized Medical - Outpatient and Home Healthcare with respect to share price. The stock has climbed 40%, way higher than the broader industry’s decline of 0.8%.
Further, Quest Diagnostics’ estimate revision trend for the current year is favorable. In the past 60 days, 14 estimates have moved up with no downward revision. The magnitude of estimate revision over the same time period increased 2.2% to $5.56 per share.
The company also has a trailing four-quarter average positive earnings surprise of 5.15%.
Quest Diagnostics Incorporated Price and Consensus
Quest Diagnostics Incorporated Price and Consensus | Quest Diagnostics Incorporated Quote
Additionally, the Zacks Rank #2 (Buy) company has an impressive Growth Style Score of ‘B’. Our Growth Style Score highlights all the vital metrics of the company’s financials to obtain a clearer picture of the quality and sustainability of its growth. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) offer the best investment opportunities.
Growth Catalysts
Quest Diagnostics’ first-quarter report was quite impressive as earnings and revenues surpassed the Zacks Consensus Estimate. The quarterly performance was backed by successful execution of the company’s strategy to grow its esoteric testing and drive substantial growth. Major drivers behind the quarter’s solid earnings performance included two natal genetic carrier screening, prescription drug monitoring, hepatitis C and QuantiFERON TB testing.
In addition, we are impressed with the company’s growing list of strategic partnerships with healthcare leaders. These include the latest tie-up with Safeway and HealthOne Systems of HCA Healthcare. Other recent alliances include Quintiles, a leading provider of biopharmaceutical development and commercial outsourcing services, Memorial Sloan-Kettering, the University of California and the latest professional lab services relationship with Barnabas Health. Currently, the company is looking forward to its agreement with PeaceHealth in the Pacific Northwest, which is expected to bolster growth later in 2017.
A bullish guidance also helps in keeping investors glued to the stock. Quest Diagnostic’s 2017 outlook is based on new and extended two-point strategy to generate shareholder value- accelerating growth and driving operational excellence. The company has raised its outlook for revenue growth for the period 2017–2020 at 3–5%. Earnings for the same period are expected to grow faster than revenues in the mid-to-high single digit range. According to Quest Diagnostics, its increasing number of collaborations with other health care leaders are opening up opportunities for top and bottom-line growth while improving patient experience and reducing overall cost of care.
Other Key Picks
Other top-ranked stocks in the broader medical sector are Luminex Corporation LMNX, Inogen, Inc. INGN and Edwards Lifesciences, Inc. EW. Notably, Luminex and Inogen sport a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 7.8% over the last three months.
Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of around 87%.
Edwards Lifesciences has an expected long-term adjusted earnings growth of almost 16% (last 3–5 years of actual earnings). The stock added roughly 21% over the last three months.
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