Zinger Key Points
- Quest Diagnostics Q3 adjusted EPS was $2.30, beating the $2.26 consensus. Sales rose 8.5% to $2.49 billion.
- Hurricane Milton will negatively impact net revenues by approximately $15 million and EPS by approximately 8 cents in the fourth quarter.
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Quest Diagnostics Inc DGX posted third-quarter adjusted earnings per share of $2.30, beating the consensus of $2.26.
Sales increased 8.5% year-over-year to $2.49 billion, beating the consensus of $2.42 billion.
Quest Diagnostics saw total revenue growth of 8.5%, including 4.2% organic growth, said Quest Diagnostics CEO Jim Davis.
“Our performance was driven by new customer wins and expanded business with physicians and hospitals, as well as recent acquisitions, including LifeLabs,” he added. “We are now on track to complete eight acquisitions by year’s end that meet our criteria for profitability, growth, and returns.”
Adjusted operating income increased 1.3% to $385 million.
Outlook: Quest Diagnostics revised its fiscal year 2024 revenue guidance to $9.80 billion—$9.85 billion. This compares to prior guidance of $9.50 billion—$9.58 billion and the consensus of $9.67 billion.
The company notes that the updated guidance reflects the impact of recent acquisitions, including LifeLabs and Hurricane Milton’s impact in the fourth quarter.
The company projects the disruption from Hurricane Milton to negatively impact net revenues by approximately $15 million and EPS by approximately 8 cents in the fourth quarter.
Quest Diagnostics expects 2024 adjusted EPS of $8.85-$8.95, compared to prior guidance of $8.80-$9.00 and consensus of $8.85.
Despite some variability with the guide and margins, William Blair sees this as a generally positive quarter for Quest, with fourth-quarter estimates initially appearing reasonable.
More significantly, as the focus shifts to 2025, Quest is well-positioned to boost revenue and earnings growth as anticipated.
The company is poised to be a consistent performer across various cycles over the long term, supported by the right strategies to capitalize on trends in lab testing.
William Blair maintains the Outperform rating.
Price Action: DGX stock is up 5.39% at $155.31 at last check Tuesday.
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