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Growing Testing Capacity to Aid LabCorp's (LH) Q2 Earnings?
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Laboratory Corporation of America Holdings (LH - Free Report) , also known as LabCorp, is slated to report second-quarter 2020 results on Jul 28, before market open.
In the last reported quarter, the company’s adjusted earnings exceeded the Zacks Consensus Estimate by 34.66%. The company beat estimates in each of the trailing four quarters, the average surprise being 9.99%.
Let's see how things have shaped up for this announcement.
Factors at Play
LabCorp seems well-aligned with its three key strategies — delivering advanced diagnostics, bringing new medicines to patients faster and using technology to improve patient care. However, like most companies in the industry, the business of LabCorp too has been significantly dampened in the second quarter on the mass implementation of social distancing and shelter-in-place measures to combat the spread of COVID-19.
The coronavirus outbreak has massively disrupted global supply chain with several nations imposing lockdowns. LabCorp, which carries out tests on more than 3 million patient specimens per week and supports clinical trial activity in approximately 100 countries globally through its central laboratory business, is expected to have witnessed a significant fall in its quarterly revenues.
Laboratory Corporation of America Holdings Price and EPS Surprise
In addition, since the end of first quarter, the healthcare industry players across the globe have started to postpone non-emergency and elective healthcare activities to focus on COVID-19 treatments. We expect this trend to have continued through the second quarter. LabCorp’s nutritional chemistry and food safety business sales within LabCorp Diagnostics are expected to have significantly reduced in the to-be-reported quarter, affected by lower demand.
On a positive note, its developments to support COVID-19 testing are believed to have contributed to the company’s second-quarter performance.
LabCorp was the first commercial lab to launch PCR testing on Mar 5, just after the FDA liberalized the rules around Emergency Use Authorization for testing. Till the time of the first-quarter earnings call, LabCorp had conducted over 1 million COVID-19 tests and stated that it was capable of performing more than 60,000 tests per day or 1.8 million per month nationwide.
In April, the company launched serology testing, which helps to determine if an individual has had an immune response to the virus. The company also expanded serological testing to more hospitals and healthcare organizations.
In the second quarter, in another major milestone, the company offered its COVID-19 Immunoglobulin G (IgG) antibody through its website.
In June, the company announced the launch of its neutralizing antibody test to assess the capacity of antibodies in patient plasma to inhibit the SARS-CoV-2 virus. Although this test was rolled out in the second half of the to-be-reported quarter, it is likely to have contributed to the company’s global Covance Drug Development business’ quarterly revenues.
The company also made progress with its sample collection method and offered COVID-19 at-home collection test kit nationwide in May. This is even offered to individuals without symptoms but who may have been exposed to the virus.
Looking at the demand for testing, the company significantly increased daily testing capacity, which is likely to have boosted second-quarter top line. All thesedevelopments are likely to have added to the company’s second-quarter top line.
Key Q2 Estimates
The Zacks Consensus Estimate for second-quarter earnings of 78 cents per share implies a 73.4% decline from the year-ago reported figure. The consensus estimate for revenues is pegged at $2.42 billion, suggesting a 15.9% drop from the prior-year reported number.
What Our Quantitative Model Suggests
Per our proven model, stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a good chance of beating estimates. This is exactly the case as you can see:
Earnings ESP: LabCorp has an Earnings ESP of +134.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: LabCorp carries a Zacks Rank #1.
Other Stocks to Consider
Here are a few medical stocks worth considering as these also have the right combination of elements to beat on earnings this reporting cycle.
Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +23.14% and a Zacks Rank of 2 at present.
Thermo Fisher Scientific Inc. (TMO - Free Report) has an Earnings ESP of +14.37% and is a Zacks #1 Ranked stock.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Shutterstock
Growing Testing Capacity to Aid LabCorp's (LH) Q2 Earnings?
Laboratory Corporation of America Holdings (LH - Free Report) , also known as LabCorp, is slated to report second-quarter 2020 results on Jul 28, before market open.
In the last reported quarter, the company’s adjusted earnings exceeded the Zacks Consensus Estimate by 34.66%. The company beat estimates in each of the trailing four quarters, the average surprise being 9.99%.
Let's see how things have shaped up for this announcement.
Factors at Play
LabCorp seems well-aligned with its three key strategies — delivering advanced diagnostics, bringing new medicines to patients faster and using technology to improve patient care. However, like most companies in the industry, the business of LabCorp too has been significantly dampened in the second quarter on the mass implementation of social distancing and shelter-in-place measures to combat the spread of COVID-19.
The coronavirus outbreak has massively disrupted global supply chain with several nations imposing lockdowns. LabCorp, which carries out tests on more than 3 million patient specimens per week and supports clinical trial activity in approximately 100 countries globally through its central laboratory business, is expected to have witnessed a significant fall in its quarterly revenues.
Laboratory Corporation of America Holdings Price and EPS Surprise
Laboratory Corporation of America Holdings price-eps-surprise | Laboratory Corporation of America Holdings Quote
In addition, since the end of first quarter, the healthcare industry players across the globe have started to postpone non-emergency and elective healthcare activities to focus on COVID-19 treatments. We expect this trend to have continued through the second quarter. LabCorp’s nutritional chemistry and food safety business sales within LabCorp Diagnostics are expected to have significantly reduced in the to-be-reported quarter, affected by lower demand.
On a positive note, its developments to support COVID-19 testing are believed to have contributed to the company’s second-quarter performance.
LabCorp was the first commercial lab to launch PCR testing on Mar 5, just after the FDA liberalized the rules around Emergency Use Authorization for testing. Till the time of the first-quarter earnings call, LabCorp had conducted over 1 million COVID-19 tests and stated that it was capable of performing more than 60,000 tests per day or 1.8 million per month nationwide.
In April, the company launched serology testing, which helps to determine if an individual has had an immune response to the virus. The company also expanded serological testing to more hospitals and healthcare organizations.
In the second quarter, in another major milestone, the company offered its COVID-19 Immunoglobulin G (IgG) antibody through its website.
In June, the company announced the launch of its neutralizing antibody test to assess the capacity of antibodies in patient plasma to inhibit the SARS-CoV-2 virus. Although this test was rolled out in the second half of the to-be-reported quarter, it is likely to have contributed to the company’s global Covance Drug Development business’ quarterly revenues.
The company also made progress with its sample collection method and offered COVID-19 at-home collection test kit nationwide in May. This is even offered to individuals without symptoms but who may have been exposed to the virus.
Looking at the demand for testing, the company significantly increased daily testing capacity, which is likely to have boosted second-quarter top line. All thesedevelopments are likely to have added to the company’s second-quarter top line.
Key Q2 Estimates
The Zacks Consensus Estimate for second-quarter earnings of 78 cents per share implies a 73.4% decline from the year-ago reported figure. The consensus estimate for revenues is pegged at $2.42 billion, suggesting a 15.9% drop from the prior-year reported number.
What Our Quantitative Model Suggests
Per our proven model, stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a good chance of beating estimates. This is exactly the case as you can see:
Earnings ESP: LabCorp has an Earnings ESP of +134.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: LabCorp carries a Zacks Rank #1.
Other Stocks to Consider
Here are a few medical stocks worth considering as these also have the right combination of elements to beat on earnings this reporting cycle.
Integra LifeSciences Holdings Corporation (IART - Free Report) has an Earnings ESP of +20.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +23.14% and a Zacks Rank of 2 at present.
Thermo Fisher Scientific Inc. (TMO - Free Report) has an Earnings ESP of +14.37% and is a Zacks #1 Ranked stock.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>