Quest Diagnostics Skyrocketed 6% Intraday—What’s Fueling This Breakout in the Diagnostic Sector?

Summary
• Quest Diagnostics (DGX) surged 5.97% to $176.39, hitting an intraday high of $178.02
• Q2 revenue jumped 15.2% to $2.76B, with adjusted EPS up 11.5% to $2.62
• Full-year 2025 guidance raised to $9.63–$9.83/share

Quest Diagnostics delivered a blockbuster quarter, with revenue and profit surging on strong demand for diagnostic services. The stock’s 6% intraday rally reflects optimism over its guidance hike and operational gains from automation. With the healthcare sector rallying, investors are now scrutinizing whether this breakout is sustainable.

Strong Earnings and Revenue Growth Drive DGX Higher
Quest Diagnostics’ stock price surged on robust Q2 results, including 15.2% revenue growth to $2.76 billion and adjusted EPS of $2.62, up 11.5% year-over-year. The company raised full-year 2025 adjusted EPS guidance to $9.63–$9.83, citing organic growth, acquisition synergies, and productivity gains from automation. The market reacted positively to these outperforming metrics, particularly in a sector where demand for diagnostic services remains resilient amid aging demographics and rising surgical procedures.

Healthcare Sector Rally Continues as Labcorp (LH) Follows DGX's Lead
The healthcare diagnostics sector is in sync, with Labcorp (LH) surging 3.42% intraday, reflecting shared tailwinds. Both firms benefit from expanded hospital lab management contracts and non-urgent surgical demand. DGX’s 6% rally outpaced the sector, but the broader trend underscores confidence in diagnostic providers’ ability to capture market share through innovation and operational efficiency.

Options Action Pivots on 180-Strike Calls and 165-Strike Puts
• RSI: 17.28 (oversold)
• MACD: -2.65 (bearish), Histogram: -0.93 (negative momentum)
• 200-day MA: 164.88 (below price)
• Bollinger Bands: Price near upper band (183.74), suggesting potential overextension

The technicals indicate a short-term overbought condition, but the bullish fundamentals justify a cautious long bias. Key levels to watch: 180 (psychological barrier) and 170 (support).

Top Option 1: DGX20250815C180 (Call)
• Code: DGX20250815C180
• Strike: $180
• Expiry: 2025-08-15
• IV: 20.16% (reasonable)
• Delta: 0.3696 (moderate sensitivity)
• Theta: -0.1323 (high time decay)
• Gamma: 0.0405 (strong price sensitivity)
• Turnover: 94,575 (high liquidity)
• Leverage: 76.66% (aggressive upside potential)
• Payoff at 5% upside: $8.19/share (176.39 → 185.21)
This call offers high leverage and liquidity, ideal for capitalizing on a potential break above $180.

Top Option 2: DGX20250815P165 (Put)
• Code: DGX20250815P165
• Strike: $165
• Expiry: 2025-08-15
• IV: 22.57% (reasonable)
• Delta: -0.1183 (moderate downside protection)
• Theta: -0.0189 (low time decay)
• Gamma: 0.0190 (modest sensitivity)
• Turnover: 46,543 (high liquidity)
• Leverage: 284.40% (high downside reward)
• Payoff at 5% upside: $11.39/share (176.39 → 185.21)
This put provides a low-cost hedge against a potential pullback while maintaining upside exposure.

Backtest Quest Diagnostics Stock Performance
The backtest of DGX's performance after an intraday surge of 6% shows favorable short-to-medium-term gains, highlighting the ETF's potential for positive returns following significant price movements. The 3-Day win rate is 52.79%, the 10-Day win rate is 55.18%, and the 30-Day win rate is 56.46%, indicating a higher probability of positive returns in the immediate aftermath of such events. The maximum return observed was 1.64% over 30 days, suggesting that while the returns may not be consistently high, they can be respectable in the short term.

Position for a Rally or Hedge with Precision—DGX’s Momentum Could Define the Sector
Quest Diagnostics’ 6% surge reflects a potent mix of strong earnings and bullish guidance. While technical indicators suggest a short-term overbought condition, the fundamentals justify a cautious long bias. Investors should monitor the 180 level for a breakout confirmation or a pullback to 170 for a re-entry. Meanwhile, Labcorp’s 3.42% rise highlights sector-wide optimism. For those seeking directional exposure, the DGX20250815C180 call offers high leverage, while the DGX20250815P165 put provides a safety net. Position accordingly—this stock’s momentum could set the tone for the healthcare sector in the coming weeks.