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Laboratory Corp of America Holdings LH

Morningstar Rating
$219.10 +1.10 (0.50%)
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Company Report

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.

Price vs Fair Value

LH is trading at a 10% premium.
Price
$219.10
Fair Value
$461.60
Uncertainty
Medium
1-Star Price
$346.87
5-Star Price
$735.45
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Now that commercial payers are moving away from exclusive contracts with the large independent labs, we think the prospect of cutthroat pricing competition has eased.

Bears

If significant numbers of hospital-based labs are ill-equipped to comply with Medicare's payment reporting requirements, then reimbursement pressure could increase even more in 2024-26.

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News

Trading Information

Previous Close Price
$218.00
Day Range
$217.08220.18
52-Week Range
$195.01243.30
Bid/Ask
$216.26 / $227.00
Market Cap
$18.43 Bil
Volume/Avg
598,141 / 758,628

Key Statistics

Price/Earnings (Normalized)
15.74
Price/Sales
1.58
Dividend Yield (Trailing)
1.31%
Dividend Yield (Forward)
1.31%
Total Yield
6.45%

Company Profile

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.
Sector
Healthcare
Industry
Diagnostics & Research
Stock Style Box
Mid Value
Total Number of Employees
67,000

Competitors

Valuation

Metric
LH
MYGN
SHL
Price/Earnings (Normalized)
15.7426.48
Price/Book Value
2.332.521.77
Price/Sales
1.582.421.62
Price/Cash Flow
12.2711.89
Price/Earnings
LH
MYGN
SHL

Financial Strength

Metric
LH
MYGN
SHL
Quick Ratio
0.821.640.78
Current Ratio
1.172.010.94
Interest Coverage
3.85−90.285.95
Quick Ratio
LH
MYGN
SHL

Profitability

Metric
LH
MYGN
SHL
Return on Assets (Normalized)
6.48%−1.93%4.07%
Return on Equity (Normalized)
13.21%−2.88%7.01%
Return on Invested Capital (Normalized)
8.69%−2.33%4.52%
Return on Assets
LH
MYGN
SHL
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A
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MTD
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ILMN
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WAT
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