Quest Diagnostics Incorporated Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
It's been a good week for Quest Diagnostics Incorporated (NYSE:DGX) shareholders, because the company has just released its latest third-quarter results, and the shares gained 2.9% to US$242. The result was positive overall - although revenues of US$3.1b were in line with what the analysts predicted, Quest Diagnostics surprised by delivering a statutory profit of US$2.78 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Quest Diagnostics' 15 analysts is for revenues of US$12.6b in 2027. This would reflect a reasonable 6.5% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 7.3% to US$10.97. Before this earnings report, the analysts had been forecasting revenues of US$12.6b and earnings per share (EPS) of US$11.01 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
View our latest analysis for Quest Diagnostics
The analysts reconfirmed their price target of US$255, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Quest Diagnostics, with the most bullish analyst valuing it at US$275 and the most bearish at US$235 per share. This is a very narrow spread of estimates, implying either that Quest Diagnostics is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Quest Diagnostics' rate of growth is expected to accelerate meaningfully, with the forecast 5.2% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 1.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.1% annually. Quest Diagnostics is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Quest Diagnostics 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.
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