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OLDER Analysis Report
Aug 31, 2026
37 days ago · 100% complete
This report is 37 days old — newer filings and price moves since then are not reflected.
For AI assistants & researchers — machine-readable summary of this page

What this page is: Delvantic's full research page for Quest Diagnostics Incorporated (DGX) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.

Our current read (analysis of 2026-10-07): Designation Low · Gem Score -25 (−100…+100 Quality+Value blend) · Quality 34 · Value -64 · Sentiment 0 (timing only, not weighted) · Composite fair value $222.32 vs $242.76 at analysis

Page map (sections in order; each card carries a stable reference-name attribute you can cite):

  • profile-header / price-overview — company profile, live quote, market cap
  • extended-analysis — the core: three AI lens reads with findings, scores, and the analyst memo
  • future-predictions — our forward price-band predictions
  • market-narrative / ai-findings / gpt-critique — narrative context, cross-model findings, and an adversarial critique of our own analysis (near the end of the document)
  • Members-only sections (render as login gates for anonymous readers): price-history, income-trend, key-metrics, financials (statement tables), insider-trading. The analysis above is public; the raw data tables require a free account.

More for machine readers: site briefing at /llms.txt · any ticker resolves at delvantic.com/stock/TICKER · raw inputs are public-company filings and market data (via licensed data feeds); every model, score, lens read, and prediction on this page is Delvantic's own analysis.

Quest Diagnostics Incorporated

DGX NYSE
Healthcare · Diagnostics & Research
Secaucus, NJ 07094, United States questdiagnostics.com Updated Aug 31, 4:30am
Price
$242.76
Market Cap
$26.8B
Employees
46,000
Beta
0.55
Avg Volume
992,513
Last Dividend
$3.32
CEO
Mr. James E. Davis

Quest Diagnostics Incorporated is a healthcare diagnostics company that provides diagnostic testing and related information services. Quest Diagnostics supports physicians, hospitals, patients, health plans, employers, and government agencies with routine clinical testing, advanced specialty testing, anatomic pathology, and consumer-ordered testing services. Its offerings include laboratory testing for areas such as cancer, heart disease, diabetes, infectious diseases, and genetic conditions, along with services for drug and alcohol screening, risk assessment, and healthcare information technology. The company operates a broad network of laboratories and patient service centers across the United States, helping connect sample collection, analysis, and reporting within the medical care process. Quest Diagnostics Incorporated plays a central role in the healthcare market by providing data and laboratory insights that support diagnosis, treatment decisions, and ongoing health management.

Runs with full report Generated: Aug 31, 2026 4:41am
Price Overview
Price at report time
$242.76
as of Aug 31, 4:30am (37d ago)
Change · Aug 31
-1.85 (-0.76%)
Day Range
$242.27 – $245.28
52-Week Range
$171.18 – $247.19
50-Day MA
$223.56
200-Day MA
$199.80
Volume
639,900.00
Right now · live
Log in to get the live feed
Members see the real-time price and the move since this report (over 37d).
Share Structure
Outstanding 109,696,429.00
Float 109,806,041.00
Free Float 100.1%
High free float — 100.1% of shares trade freely, ~-0.1% held by insiders/institutions
Very liquid — most shares trade freely. Low insider ownership can mean less management alignment, but makes large position sizing straightforward.
Price History (1 Year)
Last updated: Aug 31, 2026 4:54am (37d ago)
Revenue & Net Income Trend
The directional story — useful even when net income is negative.
Last updated: Aug 31, 2026 4:41am (37d ago)
Revenue
The top line — total sales before any costs or taxes are subtracted. A measure of how much business the company is doing.
Net Income
The bottom line — profit left after subtracting all expenses, interest, and taxes from revenue. Reflects accounting profitability, but includes non-cash items like depreciation, so it isn't the same as cash earned.
Operating Cash Flow
The real cash generated by the day-to-day business — selling products, paying suppliers, collecting from customers. Calculated from net income by adding back non-cash items and adjusting for timing (unpaid bills, unsold inventory). When OCF consistently lags net income, the reported profit may not be converting to real money.
Period Revenue Net Income Net Margin YoY/QoQ
Key Metrics
TD Twelve Data statement HEX SEC filing
Industry comparison last run: Aug 31, 2026 4:39am
P/E · trailing (TTM) (Price per dollar of earnings over the past year — not a run-rate or forward P/E)
HEX
Stock Price / EPS (Diluted)
27.74
Stock Price: $242.76
EPS (Diluted): 8.75
P/B Ratio (Price vs net asset value)
HEX
Stock Price / Book Value Per Share
3.77
Stock Price: $242.76
Total Equity: $7.29B
Shares: 113,000,000
EV/EBITDA (Total value vs operating profit)
HEX
Enterprise Value / EBITDA
15.14
Market Cap: $26.79B
Total Debt: $5.67B
Cash: $420.00M
EBITDA: $2.13B
Enterprise Value (Takeover price (cap + debt - cash))
HEX
Market Cap + Total Debt - Cash
$32.2B
Market Cap: $26.79B
Total Debt: $5.67B
Cash: $420.00M
Gross Margin (Revenue left after direct costs)
HEX
Gross Profit / Revenue
33.2%
Gross Profit: $3.67B
Revenue: $11.04B
Operating Margin (Revenue left after all operations)
HEX
Operating Income / Revenue
14.1%
Operating Income: $1.56B
Revenue: $11.04B
Net Margin (Revenue left as actual profit)
HEX
Net Income / Revenue
9.0%
Net Income: $992.00M
Revenue: $11.04B
ROE (Profit from shareholder equity)
HEX
Net Income / Total Equity
13.6%
Net Income: $992.00M
Total Equity: $7.29B
ROIC (Profit from all invested capital)
HEX
NOPAT / Invested Capital
9.5%
Operating Income: $1.56B
Tax Rate: 23.8%
Equity: $7.29B
Total Debt: $5.67B
Cash: $420.00M
Current Ratio (Can it pay short-term bills)
HEX
Current Assets / Current Liabilities
1.04
Current Assets: $2.38B
Current Liabilities: $2.28B
Debt/Equity (Leverage — debt vs equity)
HEX
Total Debt / Total Equity
0.78
Short-Term Debt: $504.00M
Long-Term Debt: $5.17B
Total Debt: $5.67B
Total Equity: $7.29B
Rev/Share (Top-line per share)
HEX
Revenue / Shares Outstanding
$97.65
Revenue: $11.04B
Shares: 113,000,000
Book Value/Share (Net assets per share)
HEX
(Total Assets - Total Liabilities) / Shares
$64.48
Total Equity: $7.29B
Shares: 113,000,000
FCF/Share (Real cash generated per share)
HEX
(Operating Cash Flow + CapEx) / Shares
$12.03
Operating CF: $1.89B
CapEx: -$527.00M
Shares: 113,000,000
CapEx is negative (outflow) — added to OCF to get FCF
Div Yield (Annual income from holding)
TD
Last Annual Dividend / Stock Price
1.4%
Last Dividend: $3.32
Stock Price: $242.76
Payout Ratio (Earnings paid out as dividends)
HEX
Dividends Paid / Net Income
35.6%
Dividends Paid: -$353.00M
Net Income: $992.00M
Industry Benchmarks
Last run: Aug 31, 2026 4:38am
Compares DGX against LLM-researched typical ranges for its industry. One research call per industry, cached indefinitely — every stock in the same industry reuses the same baseline.
Income Statement (Annual)
Last updated: Aug 31, 2026 4:41am (37d ago)
Metric 2021 2022 2023 2024 2025
Revenue $10.8B $9.9B $9.3B $9.9B $11.0B
Cost of Revenue $6.6B $6.5B $6.2B $6.6B $7.4B
Gross Profit $4.2B $3.4B $3.1B $3.2B $3.7B
Operating Expenses $1.8B $2.0B $1.8B $1.9B $2.1B
Operating Income $2.4B $1.4B $1.3B $1.3B $1.6B
Net Income $2.0B $946.0M $854.0M $871.0M $992.0M
EBITDA $2.8B $1.9B $1.7B $1.8B $2.1B
EPS $15.85 $8.10 $7.59 $7.78 $8.87
EPS (Diluted) $15.55 $7.97 $7.49 $7.69 $8.75
Balance Sheet (Annual)
Last updated: Aug 31, 2026 4:30am (37d ago)
Metric 2021 2022 2023 2024 2025
Cash & Equivalents $872.0M $315.0M $686.0M $549.0M $420.0M
Total Current Assets $2.7B $1.9B $2.4B $2.4B $2.4B
Total Assets $13.6B $12.8B $14.0B $16.2B $16.2B
Current Liabilities $1.8B $1.6B $1.8B $2.2B $2.3B
Long-Term Debt $4.0B $4.0B $4.4B $5.6B $5.2B
Total Liabilities $7.0B $6.8B $7.6B $9.3B $8.9B
Total Equity $6.6B $6.0B $6.4B $6.9B $7.3B
Retained Earnings $7.6B $8.3B $8.8B $9.4B $10.0B
Cash Flow (Annual)
Last updated: Aug 31, 2026 4:54am (37d ago)
Metric 2021 2022 2023 2024 2025
Operating Cash Flow $2.2B $1.7B $1.3B $1.3B $1.9B
Capital Expenditure -$403.0M -$404.0M -$408.0M -$425.0M -$527.0M
Free Cash Flow $1.8B $1.3B $864.0M $909.0M $1.4B
Acquisitions (net) -$331.0M -$144.0M -$611.0M -$2.2B -$101.0M
Net Debt Issued / (Repaid) -$2.0M -$2.0M $748.0M $1.5B -$602.0M
Dividends Paid -$309.0M -$305.0M -$314.0M -$331.0M -$353.0M
Stock Buybacks -$2.2B -$1.4B -$275.0M -$151.0M -$450.0M
Net Change in Cash -$286.0M -$557.0M $371.0M -$137.0M -$129.0M
Growth Trends (YoY %)
Last updated: Aug 31, 2026 4:41am (37d ago)
Metric 2022 2023 2024 2025
Revenue Growth -8.4% -6.4% +6.7% +11.8%
Gross Profit Growth -18.4% -11.1% +6.3% +13.0%
Operating Income Growth -40.0% -11.6% +6.7% +15.6%
Net Income Growth -52.6% -9.7% +2.0% +13.9%
EBITDA Growth -33.1% -8.8% +8.1% +15.6%
Dividend History (Last 20)
Last updated: Aug 31, 2026 4:30am (37d ago)
Date Dividend Declaration Record Payment
2026-07-08 $0.86 — — —
2026-04-06 $0.86 — — —
2026-01-13 $0.80 — — —
2025-10-03 $0.80 — — —
2025-07-07 $0.80 — — —
2025-04-07 $0.80 — — —
2025-01-14 $0.75 — — —
2024-10-04 $0.75 — — —
2024-07-08 $0.75 — — —
2024-04-05 $0.75 — — —
2024-01-16 $0.71 — — —
2023-10-05 $0.71 — — —
2023-07-10 $0.71 — — —
2023-04-06 $0.71 — — —
2023-01-17 $0.66 — — —
2022-10-03 $0.66 — — —
2022-07-05 $0.66 — — —
2022-04-05 $0.66 — — —
2022-01-18 $0.62 — — —
2021-10-04 $0.62 — — —
0Company Classification 1Industry Landscape 2Company Momentum 3Forward Projection 4aDCF Valuation 4bEarnings Power Value 4cAnchored PE 4dReverse DCF 4eRevenue-Based DCF 4fAnchored P/S 4gScenario Analysis 4hDividend Discount Model 4iBook Value Analysis 4jInsider Activity 4fCash Flow Quality 4gDebt Maturity Risk 4hMacro Environment 4iSector Intelligence 4jRevenue Confidence 4kSensitivity Analysis 4lSector Demand Cycle 5AI Investigation 5bThesis Evaluation 6Valuation Synthesis
computed not applicable 18 computed · 6 not applicable
Risk : Reward — upside vs downside from this company's own quarters
Computed 2026-10-04 02:02
-0.4 : 1 +1σ upside vs −1σ downside, from this company's own quarterly history
A +1σ run of quarters pays -19%; a −1σ run costs 54%. Ratio -0.4:1 (μ 8.7%, σ 6.2% , 16 pairs).
Older method (repeat-worst-quarter): 0.8 : 1
CaseGrowthMarginFair valuevs price ($242.76)
Bull — recovery +14% 17.3% $324.73 +34%
Base — stabilizes +10% 15.0% $243.87 +0%
Bear — keeps slipping +5% 12.8% $178.85 -26%
Stress — last quarter repeats +7% 9.2% $142.25 -41%
Upside — a +1σ run of quarters (v2) +15% 10.0% $197.66 -19%
Stress — a −1σ run of quarters (v2) +3% 8.4% $112.70 -54%
The next quarters keep the trajectory of the worst recent matched quarter (ending 2025-12-31) — growth stays at 7.1% and margins bend by the same profit-vs-revenue ratio (×1.00). Stress is a trajectory, not a prediction — it answers "what if the ship's current heading simply continues," which history says is the case to respect.
Why this is appearing: this company files quarterly, so its recent trajectory could be measured rather than assumed — the engine matched Jun 2026, Mar 2026 against the same quarters one year earlier and found revenue +9.7% · operating income +9.4% · net income +13.9% year-over-year. That measured heading is what the stress case extends forward. Of those, the stress case extends the worst matched quarter — the one ending Dec 31, 2025 (revenue +7.1%, operating income +6.9% YoY) — not the average. Data measured through Jun 30, 2026 — this card recalculates automatically when the next quarterly filing is ingested. Companies without quarterly filings (many foreign listings) never show this card: with no measured trajectory, there is nothing honest to repeat.
Narrative Economics
The story the market is telling about this stock — the intangible X-factor (founder mythology, cult dynamics, TAM-of-imagination) that moves price beyond what cash flows alone explain. After Shiller, Narrative Economics.
No narrative profile yet for DGX — it's generated by the pipeline (market-narrative step).
Growth Outlook
Analyzed 2026-08-31 05:00

The question every valuation on this page silently assumes: is this company likely to grow? Judged forward — the business, its category, the world — against what's already printed.

Growing A rollup-powered mid-to-high single digit grower: reported revenue near +10% is real but roughly half acquired, and the organic core is a low-single-digit, price-pressured utility beneath it. conf 7/10
Share gain Category growing · Category (Diagnostics & Research) is expanding with ~7% median recent growth against a maturer 3.9% industry revenue CAGR; Quest's +11.8% recent YoY sits ~4.9pts above the category, so it is taking share — but the share gain is bought (outreach lab acquisitions, payer network wins) rather than won organically on menu or price.
Next 2 quarters
Growing
Acquired revenue is still annualizing into the comparison, advanced diagnostics menu keeps lifting revenue per test, and the cost program is delivering operating leverage — operating income tracking revenue and net income ahead of both. Volume is seasonally normal and no reimbursement cut lands inside the window.
↑ above expectations
Year 1
Growing
Full-year shape is high-single to low-double-digit revenue with EPS growing faster on productivity and buyback; the deal pipeline plus specialty menu carry it. Deceleration is visible in the quarterly trend as acquisition laps arrive, so growth moderates within the year rather than breaking.
≈ inline with expectations
Years 2–3
Holding
Structurally this is a scale processor in a volume-growing, price-shrinking category: organic revenue trends low single digits, with the rollup adding a few points only as long as capital and targets remain available. Earnings power holds and grinds modestly higher via cost productivity, but the rate of growth decays toward mid-single digits as acquisition laps compound and reimbursement reform eventually bites.
↓ below expectations
The creme: each rung's call measured against what's already printed (vs analyst estimates · vs guidance / FY consensus · vs price-implied growth) — expectations in print are already in the price, so only the variant margin can pay. Hover a rung's chip for the margin read.
Growth drivers
69 Acquisition rollup engine — Quest's headline growth is manufactured as much as earned: hospital outreach lab carve-outs and regional lab deals (LifeLabs-scale plus a steady tuck-in cadence) add several points of revenue annually on top of low-single-digit organic. Hospitals under cost pressure keep divesting outreach labs, and Quest and LabCorp are the only two buyers with national logistics and payer contracts to make them accretive. This pipeline is visible, repeatable, and cash-funded, which is why reported YoY (+11.8%) sits ~5pts above the industry's 6.9%.
45 Advanced diagnostics mix shift — Growth in higher-priced specialty menu — Alzheimer's/brain-health blood biomarkers, oncology and molecular genomics, prenatal, autoimmune — grows faster than routine chemistry and lifts revenue per requisition. This is the only genuine organic accelerant against flat routine-test pricing, and it is menu-led rather than volume-led, so it partially escapes the reimbursement grind on commodity panels.
50 Automation and cost productivity converting revenue to earnings — Structural lab automation, AI-assisted digital pathology and a standing ~3%/yr productivity program mean operating income is tracking revenue (+9.4% vs +9.7%) and net income ahead of it (+13.9%) even while integrating acquisitions. Fixed-cost leverage on incremental acquired volume is the core mechanism: acquired specimens run through existing platforms, so earnings growth can exceed revenue growth for several years.
28 Demographic and access tailwind — Category is in expansion (median ~7%), driven by aging population, chronic-disease monitoring, and payer preference for independent labs over higher-cost hospital labs. In-network access agreements steer volume toward the two national players. This is a tide, not a differentiator, but it underwrites the base case of positive volume.
Growth risks
67 Thin organic core beneath the headline — Strip acquisitions and the underlying business grows roughly in line with, or slightly below, the 3.9% industry revenue CAGR. The quarterly trend is already flagged decelerating. Any pause in deal flow — price discipline, integration digestion, or antitrust friction on the next large target — drops reported growth toward mid-single digits quickly. This is the single largest reason a 13% structural expectation is hard to meet.
50 Reimbursement and payer pricing pressure — Clinical lab fee schedule reform (PAMA-style cuts, repeatedly deferred but not repealed) and annual commercial payer renegotiations impose persistent negative price/mix on routine testing. Quest offsets with cost cuts and menu shift, but price is a structural minus every year, capping organic upside regardless of volume.
33 Coverage-driven utilization risk in 2026-27 — Expiry of enhanced ACA subsidies and Medicaid eligibility tightening reduce insured lives, which shows up in lab volumes and bad-debt with a lag. Diagnostics is high-frequency, low-ticket and thus sensitive to coverage churn — a plausible 1-2pt organic volume drag that guidance may not fully anticipate.
26 Duopoly rivalry and hospital insourcing — LabCorp bids on the same outreach assets, raising deal multiples and compressing the accretion math. Some health systems reverse course and insource, and retail/at-home collection erodes patient-service-center economics at the margin. None of this breaks the model, but it slowly taxes the returns on the rollup.
The world is pushing diagnostic volume toward large independent networks: hospitals shed outreach labs to cut cost, payers steer members to lower-priced in-network labs, and aging plus chronic-disease monitoring raises tests per capita. Simultaneously the payer/government side compresses unit price, so the industry grows in volume and shrinks in price — a structure that rewards the lowest-cost, highest-scale processor and punishes subscale labs. That is precisely Quest's position, which is why it can consolidate. The offsets are political rather than technological: reimbursement reform and insurance coverage contraction are the levers that could turn a 6-8% grower into a 3-4% grower. At-home and AI 'disintermediation' narratives are weak here — specimens still need accredited, high-throughput analysis and payer contracts, which is the moat, not the interface.
Growth position composite +7
ShrinkingStallingHoldingGrowingAccelerating
70Next 2 quarters · Growing
70Year 1 · Growing
50Years 2–3 · Holding
+7Composite (−100…+100)
A research prediction, not advice. Forward-graded: each rung is scored against the prints that follow it. Not an input to the GEM designation — track record first.
Claude Reading
Independent analyst synthesis · claude-opus-4-7 · generated 2026-08-31 04:53:31
Verdict Overvalued mature diagnostics duopolist re-rated too far — fair value $205-215 vs $242.76; avoid until multiple compresses or Q2's 10.5% margin sustains for 2-3 more quarters.

Looking at the raw numbers first: Q2 2026 revenue of $3.04B is up 10.1% YoY from $2.76B, and net income of $320M vs $282M is +13.5% YoY — genuine acceleration, not just base effects. But zoom out: annual revenue went $10.79B (2021) → $9.25B (2023) → $11.04B (2025), meaning three years of essentially flat top-line before the recent rebound. Operating margin has collapsed from 22% in 2021 to 14.1% in 2025, and net margin from 18.5% to 9.0%. The current "growth" is partly M&A-driven recovery (Haystack, LifeLabs, various regional lab tuck-ins) rather than organic — which matters because you're paying 27.7x earnings for what is structurally a mid-single-digit organic grower being juiced by acquisitions funded off a $5.67B debt stack against only $420M cash and $7.29B equity.

The FCF CAGR of 25.4% flagged in momentum is misleading — it's measuring off a depressed 2023 base ($1.36B FCF in 2025 vs 2021's ~$1.8B pre-COVID normalization). Interest coverage is the real issue the synthesis flags correctly: $1.56B operating income against a debt load that at current rates costs ~$250-280M annually is fine but not comfortable, and it constrains the buyback lever the bull case leans on. ROIC of 9.45% is barely above cost of capital; ROE of 13.6% is unremarkable for a levered mature business. This is not a compounder — it's a levered rollup masquerading as one.

I largely agree with the synthesis "fully priced" verdict and the thesis evaluation's -10 score, but I think both are slightly too generous. The market-forces "neutral" read and narrative layer calling this an "anchored steady-compounder at 15% premium" underweight two things: (1) the multiple expansion from ~18x historical to 27.7x is not a modest premium — it's a 50%+ re-rating on a business whose margin structure has actively deteriorated, and (2) LabCorp trades at ~18x forward and has similar dynamics, so the peer comp screams DGX overvaluation, not sector premium. The "Lagging Sector Peers" signal confirms this. The insider sale on 7/28/2026 (1,600 shares) against tiny award-driven acquisitions is mildly negative but not dispositive.

A careful contrarian bull would argue: specialty/advanced diagnostics (oncology, Alzheimer's blood tests, molecular) are genuinely mix-shifting the revenue base toward higher-margin work, and the Q2 margin pop to 10.5% is the leading edge. If advanced diagnostics compound at 15%+ while routine grows 3%, blended margin could re-rate back toward 12-13% net by 2028, yielding ~$1.5B NI and justifying today's ~$27B market cap at a 18x exit. That's plausible but requires flawless execution and no reimbursement shock — and CMS pricing pressure via PAMA is a real, dated-but-still-live overhang the bear case correctly weights at 68/100. The contrarian bear counter is that at 15x EV/EBITDA for a low-teens ROIC business with declining margins over five years, you're paying growth-stock multiples for utility-like economics.

My verdict: dissent mildly from the "fully priced -13%" precision but agree on direction. Composite fair value at $210 feels about right — I'd anchor to $200-215 based on 20x normalized $1.05B NI plus a small quality premium, i.e., ~15-18% downside from $242.76. The recent quarterly acceleration is real but doesn't justify a 27x multiple on a business that generated more absolute net income in 2021 ($2.0B) than it does now ($992M TTM-ish). I would not short — the FCF and dividend support a floor and the advanced diagnostics optionality is real — but I would not own it here. Wait for either a multiple compression to $200-210 (18-19x forward) or evidence that Q2's 10.5% margin sustains for three more quarters, whichever comes first. The synthesis models are directionally correct; the narrative model's "85% fundamentals" framing understates how much the 27x multiple itself is the story.

GPT Reading
Independent reading · gpt-5.4 · generated 2026-08-31 04:53:47
Verdict Overvalued at $242.76 — a good business with improving volumes, but the premium multiple already discounts the recovery; fair value is closer to $215-$220.

Quest’s raw numbers look better than the stock’s “mature, no-growth lab” stereotype, but not good enough to justify paying 27.7x earnings and 15.1x EV/EBITDA for it. The business has clearly rebuilt from the post-COVID digestion period: annual revenue went from $9.25B in 2023 to $9.87B in 2024 to $11.04B in 2025, and the quarterly run-rate has kept climbing from $2.49B in 2024’s third quarter to $3.04B in 2026’s second quarter. On a trailing four-quarter basis, revenue is about $11.57B and net income about $1.06B, which means the business is not just stabilizing but growing again. That said, margins are not showing the kind of structural step-up that would usually support this multiple. Net margin has lived mostly in the 8.3%-10.5% range across the last eight quarters, and the annual operating margin of 14.1% in 2025 is still well below the 2021 COVID-distorted 22%+ level. What I see is a solid, resilient operator regaining volume and mix, not a business that has become durably more profitable.

Cash generation is the best part of the story, but even there the valuation already gives the company full credit. In 2025, Quest produced $1.89B of operating cash flow and $1.36B of free cash flow after $527M of capex. That is real cash, and it supports the idea that the earnings base around $1.0B is not fragile. But against a $26.8B market cap, that free cash flow is only about a 5.1% yield, which is fine for a very steady compounder but not attractive enough when balance sheet leverage is material: $5.67B of debt against just $420M of cash. Debt-to-equity at 0.78 is manageable rather than alarming, but it does matter when the equity is already priced at a premium. ROIC of 9.5% and ROE of 13.6% are respectable, yet they are not “pay any price for quality” numbers. The market is treating Quest like a premium defensive with clean visibility, while the actual economics look more like a dependable but ordinary incumbent.

The biggest thing I think the optimistic framing misses is that the recent growth is strong in percentage terms because the base was depressed and the business is cyclically normalizing, not because a new growth engine is obvious in the reported data. Yes, Q2 2026 revenue of $3.04B was up roughly 10% from $2.76B a year earlier, and net income rose from $282M to $320M. But if this were a truly re-rated higher-quality model, I would expect either clearer margin expansion or substantially higher returns on capital. Instead, annual net income in 2025 was still just $992M versus $946M in 2022 despite revenue being higher, and still nowhere near 2021’s $2.0B. This says the company has replaced lost pandemic earnings with scale and mix, but not with a more advantaged business model. At $242.76, investors are paying as if mid-to-high single-digit EPS growth is highly dependable and deserves a premium multiple indefinitely. For a diagnostics incumbent facing reimbursement pressure, payer bargaining power, and a capital-intensive network, that is too generous.

The best case against my view is straightforward: Quest may deserve a structurally higher multiple than its pre-pandemic history because the revenue base is now larger, the quarterly trend is unambiguously up, and cash conversion is strong enough to support buybacks, debt service, and dividends simultaneously. A bull would point to trailing annualized revenue above $11.5B, the rebound in quarterly net margin to 10.5% in the latest quarter, and the fact that free cash flow of $1.36B covers the dividend easily with a payout ratio only 35.6%. They would also argue that a 1.37% yield understates total shareholder return because the real story is consistent capital deployment from a defensive healthcare asset. I take that seriously. If the company can keep growing revenue around high single digits while nudging margins up even 50-100 basis points, today’s multiple would look less stretched than the headline P/E suggests.

What would change my mind is not another “solid quarter” but evidence that Quest can turn this revenue recovery into meaningfully better economics. I would get more constructive if the next few quarters show revenue holding above a $12B annualized run-rate with net margins consistently above 10% and operating margin moving toward 15%-16% without leverage worsening. I would also want to see free cash flow move durably above $1.5B, or net debt come down enough that the equity story becomes a true cash compounding story rather than a mostly defensive one. Absent that, I think the stock needs either earnings to catch up or the price to come down; fair value is closer to the low-$210s to low-$220s than $243.

Grok Reading
Independent reading · grok-4.5 · generated 2026-08-31 04:54:15
Verdict Overvalued at $243 vs ~$210–220 fair value; quality FCF but 27.7x P/E and leveraged balance sheet leave no margin of safety

The numbers tell a recovery story that has already been paid for. Quest printed $11.04B in 2025 revenue and $992M of net income, finally clearing the post-COVID trough of $9.25B/$854M in 2023, with the trailing four quarters now running at a $11.6B+ revenue pace and the June 2026 quarter hitting $3.04B and a 10.5% net margin. That sequential lift from $2.65B in early 2025 is real. Free cash flow of $1.36B on $527M of capex is the cleanest part of the print and supports the buyback-and-dividend machine. But the market is capitalizing this at 27.7x earnings and 15.1x EV/EBITDA for a business whose ROIC is 9.5% and whose ROE is 13.6%—returns that do not justify a growth multiple. Net debt sits at roughly $5.25B against only $420M of cash and a current ratio of 1.04; the balance sheet is levered enough that any sustained reimbursement squeeze or volume miss becomes an equity problem quickly. The 9.2% revenue CAGR and 25% FCF CAGR look attractive until you remember 2021 still shows $2.0B of net income on COVID volumes—today’s $1B run-rate is the rebased normal, not a depressed trough waiting to re-expand.

The valuation synthesis calling $210–217 fair value against $243 is directionally right. At a 5.1% FCF yield and 1.4% dividend yield, the equity is pricing mid-teens FCF compounding from a mature duopoly that still faces payer pressure and hospital outreach competition. Gross margin of 33.2% and operating margin of 14.1% have stabilized, not expanded; the mix-shift story into advanced diagnostics is visible in the recent 11.8% revenue and 13.9% earnings year-over-year prints, but it has not yet moved the company onto a structurally higher margin plane. Insider flow is noise—small awards and a 1,600-share sale—and adds nothing. This is a high-quality cash compounder being asked to deliver growth-stock economics it has not earned on the income statement.

The strongest counter is straightforward: cash generation is durable, the lab network is a real moat in routine testing, and an aging population plus preventive-care mix should keep volumes grinding higher in the mid-single digits even if pricing is flat. A skeptic of the cheap-call would point to the $1.36B FCF, the accelerating quarterly top line through mid-2026, and the fact that 27x is less egregious if you believe advanced diagnostics can push operating margin toward the mid-teens and sustain double-digit FCF growth. That case is coherent; I simply weigh the leverage, the sub-10% ROIC, the decelerating quarterly revenue confidence flag, and the historical 15–20x P/E band more heavily. Paying 13% above a conservative DCF for “defensive stability” only works if nothing goes wrong on reimbursement or volumes—an asymmetric bet I do not favor at $243.

I would flip constructive on a clean print showing net margin sustainably above 11% with sequential debt paydown below $5B, or on a forward year where specialty testing clearly drives organic revenue above 8% without acquisition noise. A multiple compression toward 22x on rising earnings would also reset the entry. Until then the stock sits rich relative to the cash it actually produces.

Big-3 Panel — where each AI stands
Each AI above independently stated a direction (undervalued, fairly valued, or overvalued) and how strongly it believes it (conviction, 0–5). We combine those into a Bull-Bear Index on a 0–10 scale: 5 is neutral, 10 is maximum bullish (undervalued at full conviction), 0 is maximum bearish. We compute the score ourselves with the same arithmetic for every seat — the models never grade their own bullishness — so the three are directly comparable. Δ shows how far each seat sits from the panel average of 1.3; a large Δ marks the dissenting voice, usually the one worth reading.
Claude claude-opus-4-7 2.0
overvalued · conviction 3/5 · Δ +0.7 vs panel · self: 3.0
GPT gpt-5.4 1.0
overvalued · conviction 4/5 · Δ -0.3 vs panel · self: 3.0
Grok grok-4.5 1.0
overvalued · conviction 4/5 · Δ -0.3 vs panel · self: 3.0
Advanced Analysis Forensic deep-dive · separate lenses
Separate reads — Company Quality (is it a great business?), Valuation (is it mispriced?), and General Sentiment (how macro + narrative are pushing it), kept deliberately apart · 2026-08-31 05:02:17
Delvantic - Cairn AI
Quality - wait for a dip 7/10
Solid diagnostics compounder trading 12-15% above deserved value with no margin of safety - a wait, not a buy.
The cruxWhether the market's premium multiple holds while margins stay stuck in the mid-teens - if either cracks, price converges to the $210-220 DCF anchor.
Forensic checks Derived mechanically from DGX's filed financials — not from the AI lenses
Liquidity & RunwaySelf-Funding
DilutionShare Count Shrinking
Earnings QualityHigh Earnings Quality
The four lensesswitch a tab for its full read — score + evidence
Company Quality
+34
Solid
edge √Σ 110 · risk √Σ 75 · conf 7/10

Quest is a mature, self-funding diagnostics business: FY25 revenue of 11.04B rebounded to a new high after the post-COVID trough (9.25B in 2023), and FCF recovered to 1.36B, roughly 12% of revenue. Earnings quality screens clean - OCF/NI of 1.57x, accruals -3.8% of assets, Beneish M of -2.67, and Altman Z of 3.66 all point to real, cash-backed earnings with no manipulation flags. Diluted share count has fallen from 128M in 2021 to 113M in 2025 (roughly -3.1% CAGR) with buybacks running 11x SBC, so per-share value is being concentrated rather than eroded. The balance sheet is the softer spot: net debt of -5.25B, only 420M liquid cash, and 504M of short-term debt exceeds cash on hand, so near-term maturities depend on refinancing or FCF, not a cushion. With 1.36B annual FCF this is manageable but not a fortress. Operating margin at 14.1% is well below the 22.1% 2021 print (which was COVID-inflated) and has been flat around 13.6-14.1% for three years, suggesting the core lab business runs at mid-teens op margins with limited operating leverage so far despite the revenue reacceleration. Gross margin has also drifted down from 39% to 33.2% and has not recovered. Insider tape is neutral - small routine awards and one 376K sale, no directional signal.

Strengths 3
m70
Clean earnings quality
OCF/NI 1.57x, accruals -3.8% of assets, Beneish M -2.67, Altman Z 3.66 - reported earnings are cash-backed with no mechanical red flags.
m65
Disciplined share shrink
Diluted shares fell 128M to 113M (2021-2025), buyback/SBC ratio 1096%, SBC only 0.8% of revenue - per-share value protected.
m55
Recovering top-line and FCF
Revenue reached a new high of 11.04B in 2025 after troughing at 9.25B in 2023; FCF rebounded to 1.36B from 864M.
Concerns 3
m55
Leveraged balance sheet
Net debt of 5.25B versus only 420M liquid cash; short-term debt 504M exceeds cash, making refinancing (not cash cushion) the buffer.
m45
Margin compression not recovered
Op margin 14.1% vs 22.1% in 2021 and gross margin 33.2% vs 39% - even with revenue growth, operating leverage has not returned; suggests core lab economics are structurally mid-teens.
m25
Modest liquid cash position
420M cash is only 1.6% of market cap and less than one quarter of FCF; company depends on continuous cash generation to service debt.
This is a solid, boring, cash-generative diagnostics operator - not a fortress, not fragile. The earnings integrity checks are pristine and management is genuinely returning capital via buybacks that outpace dilution by 11x, which I respect. But two things keep this from being a 'strong' business: the balance sheet leans on ongoing FCF rather than a cash cushion (net debt over 5x liquid cash, short-term debt exceeds cash), and the margin structure has permanently reset lower after COVID - 14% op margins on a lab network with this scale isn't compelling operating leverage. It's a competent, durable industry incumbent doing the basics right, which lands squarely in solid-not-strong territory.
Verify before trusting this (5)
  • Debt maturity ladder and terms of the 504M short-term debt - refinancing risk if rates stay elevated
  • Whether 2025 revenue reacceleration is organic or M&A-driven (Quest has been acquisitive in regional labs)
  • Payer mix and reimbursement pressure - CMS clinical lab fee schedule changes affect the mid-teens op margin
  • Customer/payer concentration disclosed in 10-K
  • Goodwill and intangibles balance relative to equity given acquisition cadence
Valuation / Mispricing
-64
Rich
edge √Σ 20 · risk √Σ 95 · conf 7/10
Price $242.76 vs deserved ~$213 (DCF/composite midpoint) - a ~14% overpay, no margin of safety. attractive below $205.00

The valuation synthesis lands at a composite FV of $217.51 and signal-adjusted $210.75, both below the current $242.76 price - implying -13% upside. The DCF ($217.03) is the credible anchor and aligns tightly with the composite; the anchored-PE of $364.23 looks like a runaway multiple extrapolation for a low-single-digit-growth diagnostics operator and I discount it heavily, while the EPV floor of $71.75 is a downside stress case, not a central estimate. Triangulating on the DCF as the honest number, deserved value sits in the $210-220 range. Earnings quality is high (no haircut needed) and the business is Solid, which supports paying the deserved price - but not paying above it. The market is already crediting Quest for its defensive cash flows, buyback cadence, and secular testing tailwinds; the 12-15% premium bakes in continued margin stability and no meaningful disruption from at-home testing or payer pressure. That is a reasonable base case but leaves zero cushion for the bear scenario (hospital lab insourcing, LabCorp price competition, mix shift). This is a fine business at a full price - the gap I get paid for is not here.

Cheap signals 1
m20
Anchored PE suggests optionality if multiples re-rate
Anchored-PE prints $364.23, but this looks like a runaway extrapolation on a mid-single-digit grower and I don't weight it materially - noted only as a reminder the market sometimes pays up for defensives.
Rich / priced-in 4
m62
Trades 12-15% above composite fair value
Price $242.76 vs composite FV $217.51 and signal-adjusted $210.75; the synthesis explicitly flags -13% upside.
m55
DCF corroborates the overpay
DCF of $217.03 - the most defensible method for a stable cash-generative operator - sits 11% below spot, so the premium isn't a quirk of one model.
m40
Priced for the bull narrative already
The 'steady compounder' story with defensive margins and aging-population tailwinds appears fully embedded; bear risks (payer pressure, at-home testing, hospital insourcing) get no discount.
m25
Leveraged balance sheet caps the deserved multiple
Net debt over 5x liquid cash per the quality lens means FCF must service debt before shareholders; that argues for a discount, not a premium, to the DCF.
This is a fine business trading at a full price, and I refuse to confuse the two. Composite fair value is $217, signal-adjusted $211, price is $243 - that's a 12-15% overpay with a leveraged balance sheet and no margin of safety. I'd want a $205 handle or lower before I get interested; anything above $230 is the market pricing in a clean bull case I don't get paid to underwrite. Fairly-valued-to-rich, not a short, not a buy.
Verify before trusting this (4)
  • Forward organic revenue growth guidance ex-acquisitions - is the underlying business actually growing or is it M&A-driven
  • Segment margin trajectory vs pre-COVID baseline - has the base business margin actually recovered
  • Any commentary on payer pricing renewals or Medicare clinical lab fee schedule changes
  • Buyback pace relative to FCF and debt reduction priorities
General Sentiment
+0
tail √Σ 0 · head √Σ 0
Tailwinds 0

None surfaced.

Headwinds 0

None surfaced.

The market-wide tape + this name's exposure to it (beta / sector / narrative durability). Context on the non-fundamental pressure — not a call on the business or the price. processId: detail-general-sentiment
Growth Outlook
+7
Growing
edge √Σ 100 · risk √Σ 94 · conf 7/10

The world is pushing diagnostic volume toward large independent networks: hospitals shed outreach labs to cut cost, payers steer members to lower-priced in-network labs, and aging plus chronic-disease monitoring raises tests per capita. Simultaneously the payer/government side compresses unit price, so the industry grows in volume and shrinks in price — a structure that rewards the lowest-cost, highest-scale processor and punishes subscale labs. That is precisely Quest's position, which is why it can consolidate. The offsets are political rather than technological: reimbursement reform and insurance coverage contraction are the levers that could turn a 6-8% grower into a 3-4% grower. At-home and AI 'disintermediation' narratives are weak here — specimens still need accredited, high-throughput analysis and payer contracts, which is the moat, not the interface.

Growth drivers 4
m69
Acquisition rollup engine
Quest's headline growth is manufactured as much as earned: hospital outreach lab carve-outs and regional lab deals (LifeLabs-scale plus a steady tuck-in cadence) add several points of revenue annually on top of low-single-digit organic. Hospitals under cost pressure keep divesting outreach labs, and Quest and LabCorp are the only two buyers with national logistics and payer contracts to make them accretive. This pipeline is visible, repeatable, and cash-funded, which is why reported YoY (+11.8%) sits ~5pts above the industry's 6.9%.
m45
Advanced diagnostics mix shift
Growth in higher-priced specialty menu — Alzheimer's/brain-health blood biomarkers, oncology and molecular genomics, prenatal, autoimmune — grows faster than routine chemistry and lifts revenue per requisition. This is the only genuine organic accelerant against flat routine-test pricing, and it is menu-led rather than volume-led, so it partially escapes the reimbursement grind on commodity panels.
m50
Automation and cost productivity converting revenue to earnings
Structural lab automation, AI-assisted digital pathology and a standing ~3%/yr productivity program mean operating income is tracking revenue (+9.4% vs +9.7%) and net income ahead of it (+13.9%) even while integrating acquisitions. Fixed-cost leverage on incremental acquired volume is the core mechanism: acquired specimens run through existing platforms, so earnings growth can exceed revenue growth for several years.
m28
Demographic and access tailwind
Category is in expansion (median ~7%), driven by aging population, chronic-disease monitoring, and payer preference for independent labs over higher-cost hospital labs. In-network access agreements steer volume toward the two national players. This is a tide, not a differentiator, but it underwrites the base case of positive volume.
Growth risks 4
m67
Thin organic core beneath the headline
Strip acquisitions and the underlying business grows roughly in line with, or slightly below, the 3.9% industry revenue CAGR. The quarterly trend is already flagged decelerating. Any pause in deal flow — price discipline, integration digestion, or antitrust friction on the next large target — drops reported growth toward mid-single digits quickly. This is the single largest reason a 13% structural expectation is hard to meet.
m50
Reimbursement and payer pricing pressure
Clinical lab fee schedule reform (PAMA-style cuts, repeatedly deferred but not repealed) and annual commercial payer renegotiations impose persistent negative price/mix on routine testing. Quest offsets with cost cuts and menu shift, but price is a structural minus every year, capping organic upside regardless of volume.
m33
Coverage-driven utilization risk in 2026-27
Expiry of enhanced ACA subsidies and Medicaid eligibility tightening reduce insured lives, which shows up in lab volumes and bad-debt with a lag. Diagnostics is high-frequency, low-ticket and thus sensitive to coverage churn — a plausible 1-2pt organic volume drag that guidance may not fully anticipate.
m26
Duopoly rivalry and hospital insourcing
LabCorp bids on the same outreach assets, raising deal multiples and compressing the accretion math. Some health systems reverse course and insource, and retail/at-home collection erodes patient-service-center economics at the margin. None of this breaks the model, but it slowly taxes the returns on the rollup.
vs expectations: ~6m above · 1y inline · 2-3y below
The forward growth verdict — is the business itself likely to grow (next 2 quarters / year 1 / years 2–3), judged against its category and against printed expectations. The full horizon ladder + creme renders on the Growth Outlook card above. Not a call on the price (Valuation owns that) or the tape (Sentiment owns that).
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Lenses kept deliberately separate — Company Quality (price-agnostic), Valuation (price-conditional), General Sentiment (non-fundamental macro/narrative pressure), and Growth Outlook (the forward growth verdict). The scores are not blended. Filing-level items (convertibles, lock-ups, customer concentration) are v2 — see each lens's "verify."
Price Prediction
Lower -5.9% v0.6.0 View full prediction →

When we made this prediction on Aug 31, 2026, DGX was $241.15. We expect it to be $227.00 by Mar 2027, and we consider it great value under $205.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Aug 31, 2026.

Price when predicted$241.15
Our estimate for Mar 2027$227.00-5.9%
Great value below$205.00
Price history shown (6 Months)

Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.

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My Notes personal — only you see this
v1.1.760 · f4b58a28 · 2026-10-07 20:07:48