Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
We have looked at Quest Diagnostics many times over the years, and our conclusion has never really changed, though the stock price certainly has. This is a well-run, durable, socially useful business operating in a structurally hostile pricing environment. It is the low-cost producer in a duopoly, which is worth something. But it is a price-taker whose customers' bills are set by Medicare and insurance companies, it earns roughly 9-10% on invested capital — barely above its cost of capital — and it grows organically at low-single digits, supplementing that with a steady diet of acquisitions. That is the definition of a good business, not a wonderful one. A company that cannot raise prices does not belong in the same drawer as the ones that can.
Recent filings analysed: 8-K (2026-07-23), 10-Q (2026-07-23), 8-K (2026-05-21), 8-K (2026-05-08).
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