Is Quest Diagnostics Stock a Right Pick for Your Portfolio Now?

Quest Diagnostics DGX is well-poised to grow in the coming quarters, supported by its value-creating, strategic acquisitions. The company’s Advanced Diagnostics offerings deliver and scale innovative services that improve patient care and drive growth. A strong focus on disciplined cost management also adds to the stock’s appeal. Meanwhile, unfavorable solvency and adverse impacts from macroeconomic challenges raise concerns for Quest Diagnostics’ operations.

In the past year, this Zacks Rank #2 (Buy) stock has rallied 14.2% compared with the industry’s 4.7% growth. Moreover, the S&P 500 composite has risen 15.9% in the same period. 

The renowned provider of diagnostic information services has a market capitalization of $19.62 billion. Quest Diagnostics has an earnings yield of 5.5% compared with the industry’s yield of 5%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.5%.

Tailwinds for DGX

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 and other independent labs. In the third quarter of 2025, the company completed the acquisition of select clinical testing assets of Fresenius Medical Care's wholly owned Spectra Laboratories. With this development, Quest Diagnostics will be positioned to provide dialysis-related clinical testing to independent dialysis clinics previously served by Spectra Laboratories.

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.

Strong Potential of Advanced Diagnostics: The company focuses its Advanced Diagnostics offerings across 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 third quarter of 2025, DGX posted double-digit revenue growth across several clinical areas, including advanced cardiometabolic and endocrine as well as autoimmune disease testing with 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 received a breakthrough device designation from the FDA for its Haystack MRD test. In the long term, Quest Diagnostics plans to sustain the growth momentum in each of the previously mentioned five areas.

Focus on 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 productivity across the value chain. The company deploys automation and AI technologies to improve quality, service, efficiency and the workforce experience.

In September 2025, Quest Diagnostics announced Epic as its technology partner for Project Nova. By deploying a suite of Epic solutions, including Beaker, MyChart and Care Everywhere, DGX aims to deliver deeper, more connected insights with easier, faster and more efficient experiences. Additionally, in March, Quest Diagnostics announced a collaboration with Google Cloud to streamline data management and employ GenAI to personalize customer and employee experiences.

What Ails DGX?

Escalating Debt Level: The company’s solvency level remains a concern. At the end of the third quarter of 2025, long-term debt totaled $5.17 billion, while the cash and cash equivalent balance was only $432 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.

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. The industry-wide consolidation trend has created larger insurance plans with significant bargaining power, challenging fee negotiations, and possibly limiting access to its newer innovative solutions. Also, any changes in U.S. healthcare regulation under the new administration 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 edged up 0.2% to $9.79 in the past 60 days.

The consensus estimate for the company’s 2025 revenues is pegged at $10.97 billion. This suggests 11.1% growth from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks in the broader medical space are lllumina ILMN, BrightSpring Health Services BTSG and Insulet PODD.

Illumina has an earnings yield of 3.4% compared to the industry’s -17.2% yield. Shares of the company have risen 0.6% in the past year compared with the industry’s 16.8% growth. ILMN’s earnings outpaced estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 6.7%.

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

BrightSpring Health Services, carrying a Zacks Rank #2, has an estimated long-term earnings growth rate of 53.3% compared with the industry’s 15.5% growth. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 45.1%. BTSG shares have surged 116.7% compared with the industry’s 6.3% growth in the past year.

Insulet, carrying a Zacks Rank #2, has an earnings yield of 1.7% compared with the industry’s 0.1% yield. Shares of the company have jumped 8.5% compared with the industry’s 0.2% growth. PODD’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 17.8%.

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

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