Value
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.5 |
| P/S | 8.9 |
| EV/EBITDA | 4.0 |
| Fwd P/E | 7.1 |
| PEG | 4.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.8x
- ▸PEG: 1.62
DGX · Why this verdict
Why Quest Diagnostics (DGX) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.8/10
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. | ↑Improving |
| 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. | ↑Improving |
| 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.
↑ImprovingEarnings
- 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.
↑ImprovingMomentum 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
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 1.9 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 6.2 |
| erm sentiment | 5.4 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $3,570,800 (0.016% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.5 |
| quality rank | 6.8 |
| growth rank | 4.7 |
- ▸Attractive P/E vs peers
Technical
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.7 |
| support resistance | 4.6 |
| 52w position | 8.9 |
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 6.4 |
| volatility | 6.5 |
| beta | 9.6 |
| debt equity | 6.0 |
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.2 |
| dividend safety | 6.8 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 2 days
How the verdict was assembled
Engine trigger
Earnings in 2 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:WITHIN_BANDPassed (5)
- MOMENTUM:4.7>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.4=NEGATIVE
- EARNINGS_PROXIMITY:2d<=7d
Warning (2)
- MOMENTUM:4.7<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.39
Upside
-2.6%
Downside
6.5%
Sizing output
STARTER
SetupRange Bound — RSI 43 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 2 days. Wait until post-earnings. The 10-dimension scores remain Risk (lower is worse) at 7.4 (strongest), but ASYMMETRY:-0.4=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Risk (lower is worse) at 7.4, Insider at 7.3, and Sentiment at 6.4; the weakest are Momentum at 4.7, Growth at 4.9, and Quality at 5.1. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of -0.39 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Outperformance
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Technical Breakout Momentum
Trip ifPrice closes below the 200-day moving average for more than 10 consecutive trading days.
- P3Extreme Options Hedging Risk
Trip ifPut/call ratio falls below 2.0 for 2 consecutive weeks.
- P4No Moat At Resistance
Trip ifRevenue growth exceeds 10% year-over-year for 2 consecutive quarters.