Since September 2025, Quest has been in a holding pattern, posting a small return of 4.5% while floating around $195.43. However, the stock is beating the S&P 500’s flat performance during that period.
Is there a buying opportunity in Quest, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Quest Not Exciting?
Despite the relative momentum, we're cautious about Quest. Here are three reasons we avoid DGX and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Quest’s sales grew at a tepid 3.2% compounded annual growth rate over the last five years. This fell short of our benchmark for the healthcare sector.
2. Shrinking Adjusted Operating Margin
Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals.
Looking at the trend in its profitability, Quest’s adjusted operating margin decreased by 7.8 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its adjusted operating margin for the trailing 12 months was 15.9%.
3. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Quest, its EPS declined by 2.4% annually over the last five years while its revenue grew by 3.2%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Quest isn’t a terrible business, but it isn’t one of our picks. Following its recent outperformance amid a softer market environment, the stock trades at 18.3× forward P/E (or $195.43 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. Let us point you toward our favorite semiconductor picks and shovels play.
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