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Laboratory Corp of America Holdings LH

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

LabCorp Delivers Strong Second Quarter; Maintaining Our Fair Value Estimate

Debbie S. Wang Senior Equity Analyst

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.

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Company Profile

Business Description

Laboratory Corporation of America is one of the nation's two largest independent clinical laboratories, with roughly 20% of the independent lab market. The company operates approximately 2,000 patient-service centers, offering a broad range of 5,000 clinical lab tests, ranging from routine blood and urine screens to complex oncology and genomic testing. With the addition of Covance, LabCorp also has a sizable footprint in the global contract research organization market.

Contact
358 South Main Street
Burlington, NC, 27215
T +1 336 229-1127
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 65,000

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