Earnings Beat: Quest Diagnostics Incorporated Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Quest Diagnostics Incorporated (NYSE:DGX) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. Quest Diagnostics beat earnings, with revenues hitting US$3.0b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 12%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Quest Diagnostics' 16 analysts are now forecasting revenues of US$12.0b in 2026. This would be a modest 3.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 5.6% to US$10.13. In the lead-up to this report, the analysts had been modelling revenues of US$11.9b and earnings per share (EPS) of US$9.60 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
View our latest analysis for Quest Diagnostics
The consensus price target rose 6.9% to US$239, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Quest Diagnostics at US$265 per share, while the most bearish prices it at US$204. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Quest Diagnostics' growth to accelerate, with the forecast 7.6% annualised growth to the end of 2026 ranking favourably alongside historical growth of 0.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Quest Diagnostics is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Quest Diagnostics' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Quest Diagnostics analysts - going out to 2028, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Quest Diagnostics that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.