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Investing.com -- Shares of Quest Diagnostics (NYSE: NYSE:DGX) tumbled 4.75% today after the company provided long-term guidance that failed to meet investor expectations. Despite reaffirming its full-year 2025 guidance, Quest Diagnostics’ long-term outlook extending beyond 2025, which forecasts revenue growth at a 4-5% compound annual growth rate (CAGR) and adjusted earnings per share (EPS) growth at a 7-9% CAGR, appeared to underwhelm the market.
The diagnostic information services provider, during its 2025 Investor Day held in Secaucus, New Jersey, on March 19, 2025, conveyed a series of strategic initiatives aimed at driving sustainable growth and enhancing shareholder value. These initiatives include investing in automation, robotics, and artificial intelligence, as well as modernizing IT systems through its Project Nova initiative. The company also expects to achieve double-digit growth in advanced diagnostics across five key clinical areas.
Despite these growth strategies, the company now anticipates a first-quarter revenue headwind of approximately $25 million and an EPS headwind of about $0.10 due to worse-than-anticipated weather conditions. This announcement coincides with the reaffirmation of its full-year 2025 targets, projecting net revenues between $10.70 billion and $10.85 billion, with an adjusted diluted EPS in the range of $9.55 to $9.80.
Wall Street analysts have offered mixed reactions to the guidance. Citi maintains a neutral stance with a price target (PT) of $185, recognizing the impact of weather on Q1 but considering the long-term guidance as in line with expectations. Baird, with an outperform rating and a PT of $190, acknowledges the larger-than-expected weather headwind for Q1 but remains positive on the stock, citing expected earnings acceleration in 2025 and a strong long-term outlook. Evercore ISI, in line with a PT of $175, agrees that the long-term growth view aligns with expectations, despite the Q1 weather challenges. Leerink Partners also maintains an outperform rating with a PT of $184, noting the long-term outlook is essentially in line, with some expectations for a slight increase.
Investors seem to have anticipated more aggressive growth targets, leading to the stock’s decline today. While the company’s strategic initiatives and focus on advanced diagnostics may position it for future growth, the immediate market response reflects a more cautious investor sentiment. Quest Diagnostics will continue to navigate the challenges of the first quarter while executing its long-term strategies to achieve its stated growth objectives.
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