How Quest Diagnostics' (DGX) Michigan Lab Venture and FDA Designation Are Shaping Its Growth Outlook

• Corewell Health and Quest Diagnostics recently announced an agreement to form a joint venture, Diagnostic Lab of Michigan, to expand and modernize laboratory services across Michigan, including a 100,000-square-foot laboratory facility at Corewell Health Southfield Center slated to open in early 2027, supported by a full suite of reference testing, management, and analytics services.
• Additionally, Quest Diagnostics secured FDA Breakthrough Device Designation for its Haystack MRD test, reflecting continued advances in molecular diagnostics for colorectal cancer patients and highlighting Quest’s efforts to advance innovative cancer detection technologies.
• We’ll examine how Quest’s joint venture to expand Michigan lab services could influence its investment narrative and growth strategy.

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Quest Diagnostics Investment Narrative Recap

To be a Quest Diagnostics shareholder, you'd likely need to believe in the company's ability to grow by deepening relationships with health systems, expanding advanced diagnostics, and managing cost pressures. The new Corewell Health joint venture, while aligning Quest with a top Michigan provider, is not expected to materially alter the biggest short-term catalyst (growing advanced testing demand) or the most significant risk (potential Medicare reimbursement cuts under PAMA) in the immediate term.

Of the recent announcements, the FDA’s Breakthrough Device Designation for the Haystack MRD test stands out. This highlights Quest's continued push into advanced oncology diagnostics, a key growth area supporting the near-term catalyst of increased test volumes and deeper integration into higher-value preventive and specialty testing.

However, even with innovation and new partnerships, investors should be aware that, if PAMA-related reimbursement cuts are not delayed, the resulting pricing headwinds could mean...

Read the full narrative on Quest Diagnostics (it's free!)

Quest Diagnostics' narrative projects $11.9 billion revenue and $1.3 billion earnings by 2028. This requires 4.1% yearly revenue growth and a $355 million earnings increase from $945 million today.

Uncover how Quest Diagnostics' forecasts yield a $188.19 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Three members of the Simply Wall St Community estimate Quest’s fair value from US$157.30 to US$307.93 per share. With Medicare reimbursement policy still creating uncertainty for revenue and margins, you can see that opinions widely differ, explore more viewpoints in the Community.

Explore 3 other fair value estimates on Quest Diagnostics - why the stock might be worth 13% less than the current price!

Build Your Own Quest Diagnostics Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Quest Diagnostics research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Quest Diagnostics research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Quest Diagnostics' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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