Should You Continue to Hold DGX Stock in Your Portfolio?

Quest Diagnostics DGX is well-poised to grow in the coming quarters owing to its investments in advanced diagnostics to deliver and scale innovative services.  The company’s growth strategy includes value-creating, strategically aligned acquisitions using disciplined investment criteria. Strong cost-management efforts through automation and AI technologies are also highly promising. Yet, a debt-laden balance sheet and macroeconomic pressures raise concerns for Quest Diagnostics’ operations.

In the past year, this Zacks Rank #3 (Hold) stock has rallied 16.5% compared with the industry’s 8.2% growth and the S&P 500 composite’s 23.2% rise. 

The renowned provider of diagnostic information services has a market capitalization of $21.89 billion. Quest Diagnostics has an earnings yield of 5.32%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.83%.

Factors Favoring DGX

Strong Potential of Advanced Diagnostics: Quest Diagnostics 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 brain health, the AD-Detect blood test portfolio for Alzheimer's disease sustained double-digit growth in the fourth quarter of 2025, supported by higher provider adoption. Quest Diagnostics also launched a new Aβ42/40 and p-tau-217 panel to aid in identifying amyloid brain pathology in symptomatic patients.

In oncology, the company continues to build its presence in blood-based minimal residual disease (MRD) testing. Quest Diagnostics also received the FDA’s breakthrough device designation for its Haystack MRD test. DGX also commenced separate trials with Mass General Brigham and Rutgers Cancer Institute to further research Haystack MRD's clinical utility as a guide in making post-operative therapy decisions. 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 2025, the company completed the acquisition of select clinical testing assets of Fresenius Medical Care's wholly owned Spectra Laboratories, a leading provider of renal-specific laboratory testing services in the United States. With this acquisition, Quest Diagnostics will be positioned to provide dialysis-related clinical testing to independent dialysis clinics previously served by Spectra Laboratories.

2024 saw the closing of eight acquisitions, including LifeLabs, which expanded the company’s foothold in Canada, and Allina Health’s select lab assets.

Strategic Imperative to Drive Operational Excellence: In 2025, Quest Diagnostics achieved its target of 3% annual cost savings and productivity improvements through the Invigorate cost-savings program. The company deploys automation and AI technologies to improve quality, service, efficiency and the workforce experience.

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. Quest Diagnostics teamed up with Google Cloud to streamline data management and employ GenAI to personalize customer and employee experiences.

What Ails DGX?

Escalating Debt Level: At the end of the fourth quarter of 2025, long-term debt totaled $5.17 billion, while the cash and cash equivalent balance was only $420 million. The current portion of the debt was $504 million. The times interest ratio, which indicates the company’s capacity to pay interest, was 6% in the quarter. 

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. Meanwhile, the industry-wide trend of consolidation has resulted in larger insurance plans with significant bargaining power, making it difficult for Quest Diagnostics to negotiate fee arrangements and possibly limiting access to its newer innovative solutions. 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’ 2026 earnings per share (EPS) has increased 1.8% to $10.60 in the past 30 days.

The consensus estimate for the company’s 2026 revenues is pegged at $11.75 billion. This suggests 6.5% growth from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Globus Medical GMED, Intuitive Surgical ISRG and Edwards Lifesciences EW.

Globus Medical has an earnings yield of 4.9%, well ahead of the industry’s -0.7% yield. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 18.8%. The company’s shares have rallied 19.5% against the industry’s 3.7% fall in the past year.

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

Intuitive Surgical, sporting a Zacks Rank #1, has an earnings yield of 2.1% against the industry’s -0.7% yield. Shares of the company have risen 1.5% against the industry’s 3.7% fall. ISRG’s earnings topped estimates in each of the trailing four quarters, the average surprise being 13.2%.

Edwards Lifesciences, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 3.6% against the industry’s -0.7% yield. Shares of the company have climbed 23.2% against the industry’s 3.7% decline. EW’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 5.5%.

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

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