Quest Diagnostics (DGX): Revisiting Valuation After Recent Share Price Pullback

How Quest Diagnostics Stock Has Been Performing

Quest Diagnostics (DGX) has quietly outpaced many healthcare peers over the past year, with the stock up about 17% and a solid 64% gain over the past 5 years.

That kind of long term compounding, backed by steady revenue and net income growth, makes Quest interesting for investors who prefer durable cash flows rather than story driven momentum.

See our latest analysis for Quest Diagnostics.

In the near term, the 1 month share price return of negative 7.8 percent shows some cooling after a strong run. However, the 5 year total shareholder return of about 64 percent suggests that the broader uptrend and confidence in its cash generation are still intact at around 176 dollars per share.

If Quest’s steady climb has you rethinking your healthcare exposure, it could be a good time to explore other diagnostics and providers through our curated healthcare stocks.

With earnings still growing, a modest pullback in the share price, and the stock trading at a discount to analyst targets and intrinsic value estimates, is Quest Diagnostics a quiet buying opportunity, or is the market already pricing in its future growth?

Most Popular Narrative Narrative: 10.6% Undervalued

With the narrative fair value near 197 dollars versus a 176 dollar close, the valuation case leans positive and rests heavily on future earnings power.

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.

Read the complete narrative.

Curious how steady, mid single digit growth and rising margins can still justify a richer earnings multiple than the sector average, even years out from today?

Result: Fair Value of $197.31 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifting reimbursement policies and rising wage and technology costs could pressure margins, challenging the optimistic earnings and valuation outlook around Quest.

Find out about the key risks to this Quest Diagnostics narrative.

Build Your Own Quest Diagnostics Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just a few minutes: Do it your way.

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.

Ready for more high conviction ideas?

Turn your research momentum into action today by scanning fresh opportunities on Simply Wall Street’s Screener before the next wave of smart money moves first.

• Capture tomorrow’s breakout potential by targeting under the radar opportunities using these 3635 penny stocks with strong financials with stronger financial foundations than the typical speculative name.
• Ride powerful structural trends in automation and machine learning by focusing on these 24 AI penny stocks shaping the future of intelligent software and infrastructure.
• Lock in quality at a bargain by zeroing in on these 902 undervalued stocks based on cash flows where current prices still underestimate the strength of future cash flows.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com