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Laboratory Corp of America Holdings LH

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LabCorp Benefits From Delta Variant; We've Raised Our Fair Value Estimate

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

LabCorp’s third-quarter results outpaced our expectations on the top line thanks to the surge in the delta variant of the coronavirus, as well as nonpandemic test volume growing faster than anticipated. We’ve raised our fair value estimate to $271 per share from $247 after adjusting for a longer tail on demand for COVID-19 PCR tests, more robust return of nonpandemic diagnostic volume, and time value of money. LabCorp’s ability to handily absorb another surge in COVID-19 PCR test volume in August and September underscores our view of this firm’s enviable cost structure, which provides the basis for its narrow economic moat.

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Company Profile

Business Description

Laboratory Corp. 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.

358 South Main Street
Burlington, NC, 27215
T +1 336 229-1127
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 72,400