Value
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.8 |
| P/S | 9.0 |
| EV/EBITDA | 4.1 |
| Fwd P/E | 7.2 |
| PEG | 4.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.4x
- ▸PEG: 1.56
DGX · Why this verdict
Why Quest Diagnostics (DGX) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Quest Diagnostics has posted four consecutive quarterly earnings beats and its price action shows a golden-cross breakout above all major moving averages, but an extraordinarily elevated options put/call ratio of 12.41 signals unusual institutional hedging activity, the stock is within 0.6% of near-term resistance, and the business carries no identifiable competitive moat; the risk/reward is unfavorable for new money at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business carries no recognized competitive moat and trades within 0.6% of its near-term resistance target, leaving essentially no margin for error and no structural advantage to justify holding through a potential reversal. Quality breakdown | Revenue growth accelerates above 10% year-over-year for 2 consecutive quarters, rebuilding the case for a premium valuation. | →Stable |
| CounterA forward price-to-earnings of 17.3 times with a price-to-earnings-to-growth ratio of 1.56 is not egregiously expensive for a diagnostics franchise; the absence of a formal moat classification does not preclude sustained earnings power. | ||
The company has beaten consensus EPS estimates in each of the last four quarters, with an average positive surprise of approximately 3.5%, reflecting steady operational execution in healthcare diagnostics. Earnings | Quarterly EPS continues to exceed consensus by at least 2% in the next two reporting periods. | →Stable |
| CounterAverage surprises of 3.5% are modest and may reflect conservative guidance rather than genuine earnings power; any volume softness in routine diagnostics testing could push results toward in-line or missed prints. | ||
The stock recently formed a golden cross and trades above all major moving averages with RSI at 66 and a bullish MACD reading, indicating constructive price momentum even as it approaches resistance. Momentum breakdown | Price remains above the 200-day moving average and RSI stays above 50 for the next two months. | →Stable |
| CounterOn-balance volume has been falling even as price has risen—a classic divergence warning that the breakout may lack the institutional participation needed to sustain it through resistance. | ||
A put/call ratio of 12.41—more than twelve put contracts outstanding for every call—combined with implied volatility at 61% signals unusually heavy downside hedging activity that may reflect institutional concern about a near-term catalyst or a large position unwind. Risk breakdown | Put/call ratio normalizes below 2.0 over the next quarter as hedging pressure unwinds. | →Stable |
| CounterAn extreme put/call ratio can also reflect protective puts purchased by long-term holders rather than speculative short bets; if those hedges expire worthless, they represent no fundamental change in business prospects. | ||
The business carries no recognized competitive moat and trades within 0.6% of its near-term resistance target, leaving essentially no margin for error and no structural advantage to justify holding through a potential reversal.
→StableQuality breakdown
- Expectation
- Revenue growth accelerates above 10% year-over-year for 2 consecutive quarters, rebuilding the case for a premium valuation.
CounterA forward price-to-earnings of 17.3 times with a price-to-earnings-to-growth ratio of 1.56 is not egregiously expensive for a diagnostics franchise; the absence of a formal moat classification does not preclude sustained earnings power.
The company has beaten consensus EPS estimates in each of the last four quarters, with an average positive surprise of approximately 3.5%, reflecting steady operational execution in healthcare diagnostics.
→StableEarnings
- Expectation
- Quarterly EPS continues to exceed consensus by at least 2% in the next two reporting periods.
CounterAverage surprises of 3.5% are modest and may reflect conservative guidance rather than genuine earnings power; any volume softness in routine diagnostics testing could push results toward in-line or missed prints.
The stock recently formed a golden cross and trades above all major moving averages with RSI at 66 and a bullish MACD reading, indicating constructive price momentum even as it approaches resistance.
→StableMomentum breakdown
- Expectation
- Price remains above the 200-day moving average and RSI stays above 50 for the next two months.
CounterOn-balance volume has been falling even as price has risen—a classic divergence warning that the breakout may lack the institutional participation needed to sustain it through resistance.
A put/call ratio of 12.41—more than twelve put contracts outstanding for every call—combined with implied volatility at 61% signals unusually heavy downside hedging activity that may reflect institutional concern about a near-term catalyst or a large position unwind.
→StableRisk breakdown
- Expectation
- Put/call ratio normalizes below 2.0 over the next quarter as hedging pressure unwinds.
CounterAn extreme put/call ratio can also reflect protective puts purchased by long-term holders rather than speculative short bets; if those hedges expire worthless, they represent no fundamental change in business prospects.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.8 |
| ROA | 4.2 |
| Gross margin | 2.7 |
| Op margin | 5.7 |
| Net margin | 4.5 |
| Current ratio | 4.5 |
| FCF quality | 6.6 |
| Moat | 4.8 |
| Piotroski F | 7.8 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
4.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.8 |
| EPS growth | 5.1 |
Momentum
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.5 |
| Analyst rating | 7.3 |
| Price target | 6.3 |
- ▸LLM news sentiment: +0.50 (n=1)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $3,570,800 (0.016% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.6 |
| quality rank | 6.1 |
| growth rank | 3.5 |
- ▸Attractive P/E vs peers
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 1.3 |
| 52w position | 9.3 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.4 |
| days to cover | 6.5 |
| volatility | 6.5 |
| put call | 0.0 |
| implied vol | 7.4 |
| max pain risk | 3.0 |
| beta | 9.5 |
| debt equity | 6.0 |
- ▸Elevated put/call: 2.91
- ▸Above max pain $135
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.2 |
| dividend safety | 5.2 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 169.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:6.8>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:28d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.31
Upside
-2.2%
Downside
7.1%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 63, MACD bullish
EdgeCATALYST — Earnings in 28d with 4/4 beat streak
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.3=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.31 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.1, Momentum at 6.8, and Risk (lower is worse) at 5.9; the weakest are Technical at 3.9, Peer rank at 4.6, and Growth at 4.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.31 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten consensus EPS estimates in each of the last four quarters, with an average positive surprise of approximately 3.5%, reflecting steady operational execution in healthcare diagnostics.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2The stock recently formed a golden cross and trades above all major moving averages with RSI at 66 and a bullish MACD reading, indicating constructive price momentum even as it approaches resistance.
Trip ifPrice closes below the 200-day moving average for more than 10 consecutive trading days.
- P3A put/call ratio of 12.41—more than twelve put contracts outstanding for every call—combined with implied volatility at 61% signals unusually heavy downside hedging activity that may reflect institutional concern about a near-term catalyst or a large position unwind.
Trip ifPut/call ratio falls below 2.0 for 2 consecutive weeks.
- P4The business carries no recognized competitive moat and trades within 0.6% of its near-term resistance target, leaving essentially no margin for error and no structural advantage to justify holding through a potential reversal.
Trip ifRevenue growth exceeds 10% year-over-year for 2 consecutive quarters.