DGX Stock Up on New Blood Test Development Deal With MD Anderson

Quest Diagnostics (DGX) is collaborating with The University of Texas MD Anderson Cancer Center to develop a blood test for assessing cancer risk, potentially improving early detection and screening rates; DGX shares have risen 2.6% since the announcement. The test, based on MD Anderson's Multi-Cancer Stratification Test (MCaST), aims to identify individuals at high risk for cancers, including colorectal, lung, breast, and pancreatic, with potential commercialization in North America targeted for 2026. This development aligns with a growing cancer diagnostics market, projected to reach $109.6 billion in 2024 and grow at a 6.1% CAGR through 2030.

Analysis

Quest Diagnostics (DGX) has announced a strategic collaboration with The University of Texas MD Anderson Cancer Center to develop and validate a laboratory-developed blood test for assessing elevated cancer risk, a development that spurred a 2.6% rise in DGX shares, closing at $182.07. This initiative aims to improve early cancer detection by identifying individuals at high risk for nine types of cancer, including colorectal, lung, and pancreatic, using circulating protein biomarkers derived from MD Anderson's MCaST technology. The potential commercialization in North America is targeted for 2026, contingent on successful validation, and is positioned to supplement existing screening methods, addressing current low screening rates where only 51% of U.S. adults report recent routine medical appointments or cancer screenings. This venture aligns with robust industry growth, as the global cancer diagnostics market was valued at $109.6 billion in 2024 and is projected to expand at a 6.1% CAGR through 2030. Financially, Quest Diagnostics, with a market capitalization of $20.12 billion, has demonstrated strong performance, with its stock rallying 31.3% over the past year, significantly outpacing the industry's 3.6% growth. The company also reported an average earnings beat of 2% in the trailing four quarters, and its 2025 earnings are anticipated to grow 8.6% over 2024, according to Zacks Consensus Estimate, though it currently holds a Zacks Rank #3 (Hold). This cancer diagnostic effort follows other recent innovations, such as the April introduction of a blood test for Alzheimer's disease pathology.

Key Decisions for Investors

• Investors should recognize the long-term growth potential stemming from DGX's entry into innovative cancer risk assessment, particularly given the expanding multi-billion dollar cancer diagnostics market and the test's potential to address unmet needs in early detection.
• Monitor the progress of the MCaST-based test's validation and subsequent regulatory pathway, as successful commercialization, targeted for 2026, is a key catalyst for future revenue generation.
• While DGX's strong historical stock performance (31.3% year-over-year gain) and positive earnings outlook (8.6% projected 2025 growth) are encouraging, the current Zacks Rank #3 (Hold) suggests a balanced approach, weighing these developments against existing market valuation until further de-risking of the new diagnostic occurs.