DCF Studio

    DGX · NYQ · Healthcare

    Quest Diagnostics Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 178.39

    Market price

    USD 250.81

    Implied upside

    -28.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    Value Per Share

    Perpetuity growth
    USD 178.39-28.9%
    Exit multiple
    USD 259.19+3.3%
    Market price
    USD 250.81

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 12.1bnUSD 12.6bnUSD 13.2bnUSD 13.7bnUSD 14.2bnUSD 14.7bnUSD 15.1bnUSD 15.6bnUSD 16.0bnUSD 16.4bn+3.5%
    EBITUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bn+3.5%
    NOPATUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.8bn+3.5%
    Add depreciation & amortisationUSD 583.8mUSD 609.8mUSD 635.5mUSD 660.6mUSD 685.2mUSD 709.0mUSD 731.9mUSD 753.8mUSD 774.5mUSD 793.8m+3.5%
    Less capital expenditureUSD -531.0mUSD -589.0mUSD -649.5mUSD -712.3mUSD -777.3mUSD -844.2mUSD -912.6mUSD -982.3mUSD -1.1bnUSD -1.1bn+8.7%
    Capex, % of revenue4.4%4.7%4.9%5.2%5.5%5.8%6.0%6.3%6.6%6.8%-
    Less increase in working capitalUSD -119.3mUSD -61.1mUSD -60.3mUSD -59.2mUSD -57.8mUSD -56.0mUSD -53.9mUSD -51.4mUSD -48.7mUSD -45.6m-10.1%
    Free cashflow to firmUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bn+1.4%
    Discount factor0.96590.90120.84090.78460.73200.68300.63720.59460.55470.5176-
    Present valueUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.1bnUSD 1.0bnUSD 974.4mUSD 914.8mUSD 856.3mUSD 799.0mUSD 743.3m-
    Present Value Of The ForecastUSD 10.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.695Reported 0.545, pulled toward 1.0 (Blume)
    Cost of equity7.83%Risk-free + beta x equity risk premium
    Cost of debt5.59%Risk-free + 70bp, the spread for a A+ rating at 5.6x interest cover. Book interest / average debt was lower, at 4.1%.
    Market capitalisationUSD 27.7bn80.8% of capital
    Total debtUSD 6.6bn19.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.18%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 178.39

    62% of EV

    Forecast FCFF, final year
    USD 1.4bn
    Capex at depreciation, working capital in reinvestment
    USD 2.0bn
    Less reinvestment at g/ROIC (27.2% of NOPAT)
    USD -537.9m
    Capitalised
    USD 1.4bn
    ROIC (reported)
    9.2%
    Terminal value, undiscounted
    USD 31.5bn
    Terminal value, discounted
    USD 16.3bn
    Enterprise value
    USD 26.3bn
    Less net debt
    USD 6.2bn
    Equity value
    USD 20.2bn

    Exit at 15.9x EBITDA

    Value per shareUSD 259.19

    72% of EV

    Terminal value, undiscounted
    USD 49.1bn
    Terminal value, discounted
    USD 25.4bn
    Enterprise value
    USD 35.5bn
    Less net debt
    USD 6.2bn
    Equity value
    USD 29.3bn

    Spread between methods: 37%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.18%298.26316.96343.59383.60448.98
    6.18%223.41229.81238.59250.90268.70
    7.18%174.94176.28178.39181.54186.17
    8.18%141.00140.05139.31138.84138.72
    9.18%115.91113.89111.87109.85107.83

    Outlined: this model. Green text: above today's price of 250.81. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year3.7%4.1%7.4%
    EBIT margin14.4%14.0%18.6%
    Discount rate-7.2%6.0%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.