Why Is Quest Diagnostics (DGX) Down 5% Since Last Earnings Report?

A month has gone by since the last earnings report for Quest Diagnostics (DGX). Shares have lost about 5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Quest Diagnostics due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Quest Diagnostics Incorporated before we dive into how investors and analysts have reacted as of late.

Quest Diagnostics Tops Q1 Earnings & Revenue Estimates

Quest Diagnostics' first-quarter 2026 adjusted earnings per share of $2.50 beat the Zacks Consensus Estimate by 5.45%. The metric also exceeded the year-ago adjusted figure by 13.1%.

Certain one-time expenses, like the ones related to amortization expenses, certain restructuring and integration charges, other expenses and excess tax benefits associated with stock-based compensations, were excluded from the quarter’s adjusted figures. GAAP earnings came in at $2.24 per share, up 15.5% from last year’s comparable figure.

DGX’s Revenues in Detail

Revenues reported in the first quarter rose 9.2% year over year to $2.90 billion. The metric surpassed the Zacks Consensus Estimate by 3.14%.

Diagnostic Information Services revenues in the quarter were up 9.4% on a year-over-year basis to $2.83 billion. Our model forecast was $2.74 billion.

Volumes (measured by the number of requisitions) were up 10.9% year over year in the first quarter. Revenue per requisition dropped 1.3% year over year.

DGX’s Q1 Margin Performance

The cost of services during the reported quarter was $1.95 billion, up 9.2% year over year. The gross profit came in at $942 million, rising 9.2% year over year. The gross margin of 32.5% was unchanged from the year-ago figure.

SG&A expenses were $504 million in the quarter under review, increasing 5.9% from the first quarter of 2025. The adjusted operating margin of 15.1% represented a 54 bps expansion year over year.

DGX’s Financial Position

Quest Diagnostics exited the first quarter of 2026 with cash and cash equivalents of $393 million compared with $420 million at the end of 2025. 

The cumulative net cash provided by operating activities at the end of the first quarter of 2026 was $278 million compared with $314 million a year ago. 

DGX’s 2026 Guidance

Quest Diagnostics provided an updated full-year 2026 outlook. Revenues are now expected in the range of $11.78-$11.90 billion (earlier $11.70-$11.82 billion), which indicates a year-over-year increase of 6.8%-7.8%. The Zacks Consensus Estimate is pegged at $11.76 billion.

Adjusted earnings per share is expected between $10.63 and $10.83 (previously $10.50-$10.70). The Zacks Consensus Estimate for the metric is pegged at $10.60.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Quest Diagnostics has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Quest Diagnostics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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