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Quest Diagnostics (DGX) Q1 Earnings to Grow on Base Business

Quest Diagnostics Incorporated DGX is scheduled to report first-quarter 2022 earnings on Apr 21, before the opening bell.

In the last-reported quarter, the company’s earnings of $3.33 lagged the Zacks Consensus Estimate by 0.6{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}. Its earnings surpassed estimates in two of the trailing four quarters and missed on the remaining occasions, with the average surprise being 10.93{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}.

Key Factors to Note

Quest Diagnostics has been benefiting from the two-pronged agenda to accelerate growth and drive operational excellence. In Q1, the company’s non-COVID base business might have registered a year-over-year sales rebound as the economic activities have finally been restored to pre-pandemic normalcy.

In the fourth quarter, the company acquired the assets of Labtech Diagnostics, a regional independent laboratory, serving physicians and patients primarily in South and North Carolina, Georgia and Florida. Further, hospital health system revenues have grown more than 20{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5} in Q4 compared with the 2019 levels, excluding COVID-19 testing, driven largely by the strength of its professional laboratory services contract.

Quest Diagnostics Incorporated Price and EPS Surprise

Quest Diagnostics Incorporated Price and EPS Surprise

Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote

These developments are likely to have positively impacted the company’s top line in Q1.

However, with the emergence of a new COVID strain globally, the non-elective hospital procedures were once again hit during the first half of Q1. The hospital staffing problem is yet another major concern that might have played an adverse role in the base business performance. Still, year-over-year results might show a recovery from COVID-affected 2020 when the business was restricted by social distancing and supply issues.

In terms of COVID-19 testing revenues, the company is expected to report a strong first half of Q1 with a growing number of cases and then a dull second half on gradual stabilization in testing demand with a decrease in daily case count. On a year-over-year basis, COVID-19 testing revenues might have declined considering a very strong year-ago comparison.

On Apr 6, the company came up with its media statement about COVID testing. Quest Diagnostics noted that in recent months, demand for COVID-19 molecular diagnostic testing declined but the pace of decline has slowed in recent weeks. Per the report, the positivity rate has climbed modestly over the past two weeks, although it remains in the low to middle single digits.

Q1 Estimates

For first-quarter 2022, the Zacks Consensus Estimate for total revenues stands at $2.63 billion, indicating a 3.14{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5} decline from the prior-year reported figure. The consensus estimate for earnings is pegged at $2.91, suggesting a year-over-year decline of 22.61{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}.

Earnings Whispers

Per our proven model, stocks with the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a good chance of beating estimates. This is exactly the case as you can see:

Earnings ESP: Quest Diagnostics has an Earnings ESP of +0.27{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks to Consider

Here are some medical stocks also worth considering as these have the right combination of elements to post an earnings beat this quarter.

Lucira Health LHDX has an Earnings ESP of +485.72{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5} and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lucira Health’s long-term earnings growth rate is estimated at 40.2{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}. LHDX’s current-year P/E of 3.73x is significantly cheaper than the S&P 500 Index’s 19.36x.

NanoString Technologies, Inc. NSTG has an Earnings ESP of +15.62{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5} and a Zacks Rank of 2.

NanoString Technologies’ 2023 earnings growth rate is estimated at 35.1{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}. NSTG’s revenue growth rate for 2023 is expected at 41.83{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}.

Meridian Bioscience VIVO has an Earnings ESP of +26.32{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5} and a Zacks Rank of 2.

Meridian Bioscience’s long-term historical earnings growth rate is 16.3{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}. VIVO’s 2022 revenue growth rate is expected to be 6.2{adb1ce361e4d115852a5ecc77da1fcd21e68b5d23904b1abbfd33825d7fe0fb5}.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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