Last Update 14 Dec 25

DGX: Future Lab Partnerships And Testing Pipeline Will Support Balanced Outlook

Analysts have nudged their price targets on Quest Diagnostics higher by between $5 and $25 per share, citing solid Q3 outperformance, raised guidance, and confidence in organic growth and future testing catalysts.

Analyst Commentary

Street research following the Q3 print highlights a generally constructive stance on Quest Diagnostics, with most price target increases framed around stronger than expected fundamentals and improving visibility into growth drivers over the next two years.

Bullish Takeaways

Bullish analysts point to Q3 sales and EPS beats and raised full year guidance as evidence that execution is tracking ahead of prior expectations, supporting higher valuation multiples.
Several notes emphasize accelerating organic volume and revenue trends, which are viewed as sustainable and a key underpinning for upwardly revised price targets into the $200 to $215 range.
Future testing catalysts, including the Haystack MRD test ramp expected in 2026, are seen as incremental growth drivers that could extend the earnings growth runway and justify premium pricing vs. more mature lab peers.
The broader lab environment is described as nearing a Goldilocks backdrop, with stable demand and manageable cost trends, which supports confidence in steady margin performance.

Bearish Takeaways

Bearish analysts, while lifting targets, largely maintain neutral stances, reflecting caution that much of the near term strength may already be reflected in the current share price.
Post earnings share pressure is attributed in part to investor rotation toward higher growth tools names, highlighting the risk that Quest trades more as a defensive lab asset and may lag in risk on markets.
Some commentary flags that sector sentiment, though improved from prior lows, remains fragile, which could limit multiple expansion even if operational execution remains solid.
Healthcare utilization and admissions trends are described as decelerating or normalizing, suggesting a more balanced backdrop where upside to estimates could become harder to achieve from here.

What's in the News

Hims & Hers Health selected Quest Diagnostics as its lab partner for a new testing offering that the company believes can scale to a $1 billion business. The agreement will integrate Quest collection and results into the Hims platform for personalized treatment plans (Wall Street Journal).
Quest and Octave Bioscience entered a strategic collaboration for the Octave Multiple Sclerosis Disease Activity Test. The arrangement gives Octave access to Quest's 7,000 patient service centers and grants Quest first rights to support specimen collection for future MS and Parkinson's assays.
A new Neurology Clinical Practice study found that two Quest developed blood tests, including the AD Detect Aβ 42/40 and p tau217 evaluation panel, achieved 91% sensitivity and 91% specificity for confirming Alzheimer's pathology. One panel has already launched and another is planned for 2026.
Quest and Guardant Health announced a multi year collaboration to offer the FDA approved Shield blood test for colorectal cancer screening through Quest's national network, with commercial rollout expected in early 2026.
Quest formed a first of its kind collaboration with Epic to power Projectova, a multi year initiative to consolidate lab IT systems and streamline ordering, reporting, scheduling and billing across Quest's nationwide operations using Epic's Diagnostic Enterprise platform.

Valuation Changes

Fair Value: Unchanged at approximately $197.31 per share, indicating no revision to intrinsic value estimates following the latest update.
Discount Rate: Edged down slightly from 6.956 percent to 6.956 percent, reflecting a negligible improvement in perceived risk or cost of capital.
Revenue Growth: Essentially flat, ticking down marginally from 3.8793 percent to 3.8793 percent, implying a stable long term growth outlook.
Net Profit Margin: Stable at roughly 11.08 percent, with only an immaterial rounding change in the model assumptions.
Future P/E: Maintained at about 20.06 times forward earnings, signaling no meaningful change in valuation multiple expectations.

Growth in advanced diagnostics, consumer wellness demand, and accretive acquisitions is driving higher test volumes, revenue, and expanding geographic reach.
Automation, AI adoption, and health data analytics are improving productivity, margins, and positioning the company for sustainable, data-driven revenue opportunities.
Regulatory reimbursement risks, shifting payer mix, healthcare coverage changes, and rising expenses threaten Quest's revenue growth, pricing power, and margin expansion amidst intensifying market competition.

Catalysts

About Quest Diagnostics

Provides diagnostic testing and services in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Ongoing growth in advanced and preventive testing-including cardiometabolic, autoimmune, brain health, oncology, and women's/reproductive diagnostics-as well as robust demand from functional medicine and wellness-focused consumers, are driving higher test volumes and increasing test-per-requisition, which supports both revenue growth and margin expansion.
The accelerating shift toward preventive healthcare and wellness, visible in the expansion of functional medicine and consumer-initiated testing, is fueling sustained demand for recurring lab services; this trend underpins expectations for stable, long-term top-line growth and improved revenue durability.
Increased adoption of automation, digitization, and artificial intelligence in laboratory operations is yielding productivity improvements and cost savings, contributing to margin expansion and enhancing future operating income and net earnings.
Strategic execution on accretive acquisitions-including the large LifeLabs deal-and expanded health system partnerships (e.g., with Fresenius) are boosting patient volumes, expanding geographic reach, and producing procurement and operational synergies that are expected to materially lift revenue and earnings.
The rising importance of health data analytics and Quest's role as a "lab engine" for consumer wellness brands positions the company to benefit from new revenue streams and further monetization opportunities as healthcare becomes more data-driven, supporting long-term earnings power.

Quest Diagnostics Earnings and Revenue Growth

Quest Diagnostics Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Quest Diagnostics's revenue will grow by 4.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 9.0% today to 10.7% in 3 years time.
Analysts expect earnings to reach $1.3 billion (and earnings per share of $10.93) by about September 2028, up from $945.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $1.0 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.2x on those 2028 earnings, down from 21.6x today. This future PE is lower than the current PE for the US Healthcare industry at 21.0x.
Analysts expect the number of shares outstanding to grow by 0.19% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Quest Diagnostics Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Potential reductions in reimbursement from PAMA (Protecting Access to Medicare Act), if not reformed or delayed, could result in approximately $100 million in annual pricing headwinds that would not be fully offset by internal actions, negatively impacting revenue and net margins.
The recently passed "One Big Beautiful Bill" and resulting forecast for 10 million more uninsured Americans over the next decade may reduce overall healthcare coverage, posing risks to Quest's test volumes and revenue growth over time, especially if utilization rates among uninsured do not offset the loss.
Increased exposure to government and exchange-based payers, as seen with LifeLabs acquisition and payer mix shift, heightens Quest's vulnerability to adverse changes in public healthcare policy, reimbursement schedules, and payment delays, potentially compressing net margins and earnings.
Persistent industry price pressures from consolidation among healthcare providers and insurers, as well as competition from non-traditional entrants (such as retail clinics and consumer health tech companies), could erode Quest's pricing power and market share, impacting long-term revenue and profitability.
Ongoing wage inflation (3–4% annually) and the need for heavy investments in modernization and automation (Project Nova, advanced technology deployment) may cause operating expenses to rise faster than anticipated, which, if not matched by sufficient productivity gains, could limit improvements in operating margins and earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $188.188 for Quest Diagnostics based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $200.0, and the most bearish reporting a price target of just $166.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $11.9 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 20.2x, assuming you use a discount rate of 6.8%.
Given the current share price of $182.68, the analyst price target of $188.19 is 2.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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