Analyst Note| Debbie S. Wang |
Thanks to stronger-than-expected demand for SARS-CoV-2 molecular tests and the quick return of non-pandemic-related tests through the second quarter, LabCorp delivered solid quarterly results, all things considered. We’re leaving our fair value estimate unchanged. Both LabCorp’s diagnostic test segment and its Covance drug-development business fared better and seem to be recovering faster than we’d expected in April. In both cases, increased demand for COVID-19 related tests has provided a significant offset to the dip in non-pandemic tests. Drug development also benefited from the earlier reopening of central labs in China. We’re standing pat on our narrow economic moat rating and see nothing to change our view of the firm’s favorable cost structure.