Should Quest Diagnostics Stock Be in Your Portfolio Right Now?

Quest Diagnostics Inc. DGX is investing in advanced diagnostics to deliver and scale innovative services that improve patient care and drive growth. Acquisitions remain a key growth driver for the company. Additionally, continued strong focus on cost management further enhances the stock’s appeal. Meanwhile, rising debt burden and ongoing macroeconomic volatilities raise concerns for Quest Diagnostics’ operations.

In the past year, this Zacks Rank #3 (Hold) stock has rallied 20.6% compared with the industry’s 0.5% growth and the S&P 500 composite’s 15.9% rise.

The renowned provider of diagnostic information services has a market capitalization of $20.44 billion. Quest Diagnostics has an earnings yield of 5.33% compared with the industry’s yield of 4.81%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.09%.

Tailwinds for DGX

Strong Potential of Advanced Diagnostics: DGX focuses on five major clinical areas — advanced cardiometabolic, autoimmune, brain health, oncology, and women's and reproductive health — to enable growth across its customer channels. In the second quarter of 2025, the company posted double-digit revenue growth in several areas, including advanced cardiometabolic, especially testing for metabolic and endocrine disorders and chronic kidney disease, as well as for the analyzer autoimmune solution.

In brain health, demand for the AD-Detect blood test for Alzheimer's disease remained strong. Quest Diagnostics also launched a new AB 42/40 and p-tau-217 panel to aid in identifying amyloid brain pathology in symptomatic patients. In oncology, the company is ramping up commercial outreach to drive Haystack MRD market adoption. In the long term, Quest Diagnostics plans to sustain the growth momentum in each of the five areas.

Progress With Acquisition Strategy: Quest Diagnostics’ strategy includes generating growth through value-creating, strategically aligned acquisitions using disciplined investment criteria. In particular, the company puts a high emphasis on accretive outreach purchases, as well as other independent labs. In 2024, Quest Diagnostics completed eight acquisitions, including LifeLabs, which expanded its foothold in Canada, and Allina Health’s select lab assets.  The company also acquired the laboratory business of three physician groups in New York.

Additionally, the acquisition of PathAI Diagnostics supports the company’s plan to increase the adoption of AI and digital pathology for better diagnosis of cancer and other diseases. The company also completed the acquisition of outreach lab assets from Ohio Health and University Hospitals — two leading non-profit health systems in Ohio. This year, Quest Diagnostics is prioritizing optimizing productivity from these deals. Revenue contributions from M&A were 10% in the second quarter, with LifeLabs accounting for approximately 8%.

Strategic Imperative to Drive Operational Excellence: Quest Diagnostics continues to target 3% annual cost savings and productivity improvements through its Invigorate cost-savings program, which includes structured plans to drive savings and improve productivity across the value chain. The company deploys automation and AI technologies to improve quality, service, efficiency and the workforce experience. For instance, the front-end automation solution has now been implemented in half a dozen sites, and DGX also completed a successful pilot of its automated accessioning platform at the Clifton lab. Employee retention improved in the second quarter, continuing the recent positive trends.

In March 2025, Quest Diagnostics announced a collaboration with Google Cloud to streamline data management and employ GenAI to personalize customer and employee experiences. The company is also investing in Project Nova, a new IT initiative to modernize its systems architecture and reduce IT costs over the long term, and support the company’s ability to optimize data insights and GenAI.

Concerns for DGX

Escalating Debt Level: At the end of the second quarter of 2025, long-term debt totaled $5.17 billion, while the cash and cash equivalent balance was only $319 million. The current portion of the debt was $504 million. Moreover, a higher debt level induces higher interest payments, which come along with the risk of failure to pay the same. The times interest ratio, which indicates the company’s capacity to pay interest, declined 0.2% sequentially to 6.1%.

Unstable Macroeconomic Backdrop: As the U.S. healthcare system continues to evolve, Quest Diagnostics faces several inherent risks. Government payers, such as Medicare and Medicaid, have taken steps to reduce the utilization and reimbursement of healthcare services, including clinical testing services. Also, with the new U.S. administration in place, any changes in U.S. healthcare regulation could have a material adverse effect on the company’s business.

DGX Stock Estimate Trend

The Zacks Consensus Estimate for Quest Diagnostics’ 2025 earnings per share (EPS) has increased 0.4% to $9.74 in the past 30 days.

The consensus estimate for the company’s 2025 revenues is pegged at $10.85 billion. This suggests 9.9% growth from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Envista (NVST), Phibro Animal Health (PAHC) and Boston Scientific (BSX).

Envista has an estimated earnings growth rate of 15.8% for fiscal 2026 compared with the S&P 500 composite’s 11.7% growth. Shares of the company have rallied 15.3% compared with the industry’s 4% growth. NVST’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 16.5%.

NVST sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Phibro Animal Health, carrying a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 26% compared with the industry’s 14.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. PAHC’s shares have surged 63.9% compared with the industry’s 4.1% growth in the past year.

Boston Scientific, carrying a Zacks Rank #2, has an earnings yield of 2.9% compared with the industry’s -0.9%. Shares of the company have rallied 33.3% compared with the industry’s 4.1% growth. BSX’s earnings outpaced estimates in each of the trailing four quarters, with the average surprise being 30.6%.

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This article originally published on Zacks Investment Research (zacks.com).

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