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Burlington, North Carolina-based Labcorp Holdings Inc. (LH) is a laboratory services company that provides information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make decisions. With a market cap of $17.2 billion, Labcorp operates through diagnostics laboratories (Dx) and biopharma laboratory services (BLS) segments offering various testing services. It is expected to announce its Q2 earnings before the markets open on Thursday, August 1.
Ahead of the event, analysts expect Labcorp to report a profit of $3.78 per share, up 10.5% from $3.42 per share reported in the year-ago quarter. The company surpassed Wall Street’s EPS projections in three of the past four quarters while missing on one other occasion. Its adjusted EPS for the last reported quarter grew 6.4% annually to $3.68, exceeding the consensus estimate.
Looking ahead to fiscal 2024, analysts expect Labcorp to report an EPS of $14.87, up 9.7% from $13.56 in fiscal 2023. Its fiscal 2025 EPS is expected to grow 7.1% annually to $15.93.
LH stock is down 10% on a YTD basis, significantly underperforming the S&P 500 Index’s ($SPX) 16.7% gains and the S&P 500 Healthcare Sector SPDR’s (XLV) 5.9% returns over the same time frame.
Labcorp’s shares fell 4.6% despite its better-than-expected Q1 earnings results on April 25. The company's strategic initiatives, like acquisitions and expanding its test menu, signal growth potential, but market sentiment weighed on its stock.
Operating in a competitive industry requires constant innovation and operational efficiency. Labcorp’s operating cash flow from continuing operations was a negative $29.8 million compared to $185.7 million generated in the year-ago quarter, driven by lower cash earnings and timing of working capital needs. A significant 66.3% decline in cash balance to $99.3 million raises concerns about its capacity to invest in innovative projects.
The consensus opinion on Labcorp stock is moderately bullish, with a “Moderate Buy” rating overall. Out of the 15 analysts covering the stock, 10 recommend a “Strong Buy,” one suggests a “Moderate Buy,” and four advise a “Hold” rating.
The average target price for Labcorp is $239.07, indicating a potential upside of 16.9% from the current price levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
