Labcorp Earnings: Non-COVID Business Solid, and Conditions Align for Improved Profits in 2024

Narrow-moat Labcorp posted solid fourth-quarter results, and full-year performance largely fell in line with our expectations. Though cost of goods sold came in slightly higher than expected, this was offset by lower sales and marketing expense; as a result, we’re leaving our fair value estimate unchanged. Fourth-quarter COVID-19 PCR revenue was down 73%, but base business sales more than compensated with 7% growth. As the largest COVID declines are now behind Labcorp, we anticipate 2024 should see generally normalized growth. In keeping with its historical diagnostic focus, the firm continues to prioritize the faster-growing esoteric test areas, including oncology and neurology.