Here's How Quest Diagnostics is Placed Ahead of Q1 Earnings

Quest Diagnostics DGX is set to release its first-quarter 2025 results on April 22, before the market opens.

The renowned diagnostics provider posted adjusted earnings per share (EPS) of $2.23 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 1.83%. The company topped earnings estimates in each of the trailing four quarters, the average surprise being 3.75%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

DGX’s Q1 Estimates

For the first quarter of 2025, the Zacks Consensus Estimate for Quest Diagnostics’ revenues is pegged at $2.62 billion, indicating an increase of 10.6% from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s first-quarter 2025 EPS suggests a 5.9% increase to $2.16.

Estimate Revision Trend Ahead of DGX’s Q1 Earnings

Estimates for Quest Diagnostics’ Q1 earnings have dropped 4 cents to $2.16 in the past 30 days.

Let’s briefly review the company’s performance leading up to this announcement.

Factors Likely to Influence DGX’s Q1 Performance

Building on a solid 2024 performance, the company’s Diagnostic Information Services (“DIS”) business is likely to have benefited from strong growth across its core customer channels. Growth is expected to have been fueled by increasing utilization of Advanced Diagnostics offerings, particularly in the faster-growing clinical areas. Ongoing demand for AD-detect blood tests for assessing Alzheimer's disease risk may have driven Brain Health growth, while Women’s Health may have continued to gain from prenatal and hereditary genetic testing sales.

Quest Diagnostics Incorporated Price and EPS Surprise

Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote

We also anticipate strong growth in the areas of advanced cardiometabolic and autoimmune testing. Additionally, customer adoption of the company’s self-collection option for testing genital tract infections likely increased. In molecular genomics and oncology, Quest Diagnostics is expected to have made progress toward commercializing the Haystack minimal residual disease blood test, following favorable feedback from the Early Experience program. All these factors are expected to have positively contributed to the company’s overall revenues in the first quarter of 2025.

Furthermore, the company may have benefited from the string of acquisitions completed last year. In January 2025, Quest Diagnostics acquired select assets of University Hospitals, which are likely to have expanded access to its test menu, patient access sites and extensive health plan coverage in Ohio. In the to-be-reported quarter, contributions from U.S. acquisitions, along with strong organic growth, may have driven Physician Lab Services growth. On top of that, Quest Diagnostics’ revenue growth may have been supported by new customer wins as well as growth among large physician groups and community health centers.

In the first quarter, Medicare Advantage plans likely generated strong volume and revenue growth. Two of the company’s health plan partnerships — Elevance Health and Sentara Health Plans — went into effect on Jan. 1. Furthermore, continuous strong demand for reference testing likely drove solid growth in the Hospital Lab Services, boosting Quest Diagnostics’ revenues. In professional lab services, the company may have also benefited from its collaborations with health systems in Connecticut, New Jersey and Pennsylvania.

Going by our model, the company’s DIS revenues are likely to increase 10.1% year over year in the to-be-reported quarter.

Operationally, Quest Diagnostics is likely to have gained from its strategic investments in automation and AI to improve quality, customer experience and productivity. The company’s Clifton, NJ, lab serves as a pilot site for many of its automation and AI solutions, which it plans to roll out to other labs this year. Besides, employee retention rates significantly improved across multiple job categories in 2024, signaling Quest Diagnostics’ strong focus on workforce engagement. The trend likely extended into the first quarter as well.

Our model projects Quest Diagnostics’ operating income (non-GAAP basis) to increase 5% year over year in the first quarter of 2025. 

What Our Model Unveils for DGX Stock

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is not the case here.

DGX’s Earnings ESP: Quest Diagnostics has an Earnings ESP of -2.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

DGX’s Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Top MedTech Picks

Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this time:

Masimo MASI has an Earnings ESP of +0.64% and sports a Zacks Rank #1 at present. The company is expected to release first-quarter 2025 results on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

MASI’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 14.41%. The Zacks Consensus Estimate for the company’s first-quarter EPS is expected to increase 61% from the year-ago quarter figure.

Veeva Systems VEEV has an Earnings ESP of +0.17% and flaunts a Zacks Rank #1 at present. The company is expected to release first-quarter fiscal 2026 results on May 29.

The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.92%. The Zacks Consensus Estimate for VEEV’s fiscal first-quarter EPS is expected to surge 16% from the year-ago reported figure.

Abbott Laboratories ABT has an Earnings ESP of +0.57% and currently carries a Zacks Rank #2. The company is slated to release first-quarter 2025 results on April 16.

ABT’s earnings surpassed estimates in each of the trailing four quarters and matched on one occasion, the average surprise being 1.64%. The Zacks Consensus Estimate for Abbott’s first-quarter EPS is expected to increase by 9.18% from the year-ago quarter figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research