Quest Diagnostics surges on earnings beat, $1B buyback
Laboratory company raises dividend 7.5% and boosts share repurchase authorization after delivering double-digit growth
Quest Diagnostics shares rose in morning trading Tuesday after the clinical laboratory company reported fourth-quarter revenue that topped Wall Street estimates and announced a $1 billion increase to its share repurchase program alongside a 7.5% dividend hike.
The Madison, New Jersey-based company reported quarterly revenue of $2.81 billion, up 7.1% from the prior year and exceeding analyst expectations of $2.75 billion. Adjusted earnings per share reached $2.42, representing an 8.5% increase year-over-year and surpassing the consensus forecast of $2.36.
For the full year 2025, Quest delivered revenue of $11.04 billion, an 11.8% increase, with adjusted EPS of $9.85, up 10.3%. The performance highlighted the company's resilience in a competitive diagnostic testing market, where it operates alongside rivals such as Laboratory Corporation of America Holdings.
Looking ahead, Quest provided 2026 guidance for revenue of $11.70 billion to $11.82 billion, representing growth of 6% to 7.1%, with adjusted EPS projected between $10.50 and $10.70. The revenue outlook exceeded analyst expectations of $11.36 billion, while the EPS guidance reflects continued confidence in the company's strategic initiatives.
"We closed 2025 with a strong fourth quarter, and delivered double-digit growth in revenues and earnings per share for the full year," said Jim Davis, Chairman, CEO, and President. "Our robust performance demonstrates continued execution of our strategy to deliver category-defining clinical innovations that fulfill customers' needs and to form strategic collaborations supporting growth."
The capital allocation announcements underscored management's commitment to returning cash to shareholders. The quarterly dividend will increase to $0.86 per share, up from $0.80, marking the 15th consecutive year of dividend increases. The annual dividend will now total $3.44 per share. Additionally, the board authorized a $1 billion expansion of the share repurchase program, adding to approximately $400 million that remained available under the existing authorization as of December 31.
During 2025, Quest repurchased 2.5 million shares for $452 million, demonstrating consistent execution of its buyback strategy. The new authorization brings total repurchasing capacity to roughly $1.4 billion, providing flexibility to reduce the share count and support earnings per share growth.
Analyst reaction has been broadly positive. Barclays upgraded the stock to overweight from equal weight in late January with a $210 price target, citing improved growth prospects. Other firms, including Jefferies and Mizuho, have also raised their price targets above $200 in recent months, reflecting confidence in Quest's positioning within the healthcare diagnostics sector.
The company's strong operational performance comes amid broader transformation in the healthcare industry, where demand for advanced diagnostic testing continues to grow. Quest has focused on expanding its capabilities in areas such as oncology, neurology, and precision medicine, while maintaining efficiency in its core testing operations.
For 2026, Quest projects cash from operations of approximately $1.75 billion and capital expenditures of roughly $550 million, leaving substantial free cash flow available for dividends, buybacks, and strategic investments. The company's market capitalization stands at approximately $21.3 billion, with shares trading near $191.
The combination of solid earnings growth, forward-looking guidance, and shareholder-friendly capital allocation positions Quest to continue delivering value in the evolving healthcare landscape. With the dividend increase marking a decade and a half of consistent payout growth, and the expanded buyback authorization signaling management's confidence in the business, investors are responding positively to the latest results.