Quest Diagnostics (DGX) Up 2.7% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Quest Diagnostics (DGX). Shares have added about 2.7% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Quest Diagnostics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Quest Diagnostics Tops Q3 Earnings and Revenue EstimatesQuest Diagnostics Incorporated’s third-quarter 2024 adjusted earnings per share of $2.30 beat the Zacks Consensus Estimate by 1.8%. The metric also exceeded the year-ago adjusted figure by 3.6%.Certain one-time expenses, like the ones related to amortization expenses, certain restructuring and integration charges, other expenses and excess tax benefits associated with stock-based compensations, were excluded from the quarter’s adjusted figures.GAAP earnings came in at $1.99 per share, up 1.5% from last year’s comparable figure.DGX’s Q3 in DetailRevenues reported in the third quarter rose 8.4% year over year to $2.49 billion. The metric surpassed the Zacks Consensus Estimate by 3.4%.Diagnostic Information Services (DIS) revenues in the quarter were up 8.9% on a year-over-year basis to $2.43 billion. This figure also surpassed our model’s projection of $2.31 billion for the third quarter.Volumes (measured by the number of requisitions) were up 5.5% year over year in the third quarter. Revenue per requisition increased 3.3% year over year.DGX’s Margin PerformanceThe cost of services during the reported quarter was $1.68 billion, up 8.8% year over year. The gross profit came in at $811 million, up 7.6% year over year. However, the gross margin was 32.6%, reflecting a 26-basis point (bps) contraction from the year-ago figure.SG&A expenses were $448 million in the quarter under review, up 17.9% from the third quarter of 2023. The adjusted operating margin of 14.6% represented a 171-bps contraction year over year.DGX’s Cash, Capital Structure and SolvencyQuest Diagnostics exited the third quarter of 2024 with cash and cash equivalents of $764 million compared with $271 million at the end of the second quarter. The cumulative net cash provided by operating activities at the end of the third quarter of 2024 was $870 million compared with $745 million in the comparable 2023 period.The company has a five-year annualized dividend growth rate of 7.77%.DGX Updates 2024 ViewQuest Diagnostics provided an updated full-year 2024 guidance. The updated guidance incorporates the impact of recent acquisitions like LifeLabs and the impact of Hurricane Milton, which is expected to reduce net revenues by nearly $15 million and EPS by approximately 8 cents in the fourth quarter.Revenues for the full year are expected in the $9.80 billion-$9.85 billion band (previously $9.50 billion to $9.58 billion). This represents a year-over-year increase of 5.9%-6.5% (earlier 1.6%-2.5%). The Zacks Consensus Estimate is pegged at $9.63 billion.Adjusted earnings per share is expected in the range of $8.85-$8.95 (previously $8.80 to $9.00). The Zacks Consensus Estimate for the metric is pegged at $8.89.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates review.VGM ScoresCurrently, Quest Diagnostics has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Quest Diagnostics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Quest Diagnostics Incorporated (DGX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks