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Valued at a market cap of $20 billion, Labcorp Holdings Inc. (LH) is a leading healthcare diagnostics company that provides comprehensive clinical laboratory services and end-to-end drug development support. The Burlington, North Carolina-based company serves doctors, hospitals, pharmaceutical companies, biotechnology companies, medical devices, diagnostics and crop protection companies, and chemical companies.
Shares of this healthcare company have underperformed the broader market over the past 52 weeks. LH has gained 13.4% over this time frame, while the broader S&P 500 Index ($SPX) has soared 31.3%. Moreover, on a YTD basis, the stock is up 6.2%, compared to SPX’s 25.5% gain.
Nonetheless, narrowing the focus, LH has outpaced the Health Care Select Sector SPDR Fund’s (XLV) 10.9% gain over the past 52 weeks but has slightly lagged behind XLV’s 6.6% return on a YTD basis.
On Oct. 24, shares of LH surged 4.6% after its better-than-expected Q3 earnings release. The company’s adjusted EPS of $3.50 increased nearly 3.6% from a year ago and surpassed the Wall Street estimates of $3.48. Its revenue also increased 7.2% year-over-year to $3.28 billion and outpaced the consensus estimates of $3.26 billion. LH benefited from a robust growth in revenues from the diagnostics laboratories segment. However, the company lowered its full-year 2024 EPS guidance due to the negative impact of the weather.
For the current fiscal year, ending in December, analysts expect LH’s EPS to grow almost 7.2% year over year to $14.53. The company has a solid track record of consistently beating Wall Street's bottom-line estimates in each of the last four quarters.
Among the 16 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 10 “Strong Buy,” one “Moderate Buy,” and five “Hold” ratings.
On Oct. 25, Baird maintained an “Outperform” rating on LH and raised its price target to $289, which indicates a massive 19.8% potential upside from the current levels.
The mean price target of $262.94 represents a modest 9% upside from LH’s current price levels, while the Street-high price target of $293 suggests a massive upside potential of 21.4%.
