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LabCorp (LH) to Report Q2 Earnings: What's in the Cards? (revised)

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Laboratory Corporation of America Holdings (LH - Free Report) , also known as LabCorp, is slated to report second-quarter 2021 results on Jul 29, before market open.

In the last reported quarter, the company’s adjusted earnings of $8.79 exceeded the Zacks Consensus Estimate by 20.1%. The company beat estimates in each of the trailing four quarters, the average surprise being 84.9%.

Factors at Play

LabCorp seems to be well poised on its three key strategies — delivering advanced diagnostics, bringing new medicines to patients faster and using technology to improve patient care.

Over the past few months, the company has started witnessing continued sales rebound in volumes of base testing. The company’s second-quarter base-business performance is expected to have registered a faster recovery rate compared to the first quarter. This is because the company might have gained from the growing number of patient visits through the months of the second quarter on falling COVID-19 cases across the country.

Laboratory Corporation of America Holdings Price and EPS Surprise

Due to extensive vaccine rollout programs and drop in case count, the company’s COVID-19 testing services wing might have registered a sharp decline in volume.

Within Covance Drug Development, the second-quarter results are expected to reflect increase in organic revenues on base business growth and contribution from COVID testing performed through central lab business. Just like the previously-reported quarter, the company is expected to have registered broad-based revenue growth, including COVID vaccine and therapeutic studies.

Starting from June, the company’sPixel by Labcorp COVID-19 PCR Test Home Collection Kits have been available at 6,000 Walgreens stores nationwide and through Walgreens collaborations with on-demand delivery services DoorDash and Instacart. Further, the company announced the expansion of its drug development offering in the Asia-Pacific region with the addition of bioanalytical services in Singapore. These are expected to have strongly contributed to the company’s Q2 performance. Strong execution of LaunchPad savings might have improved Q2 margin.

The Zacks Consensus Estimate for Covance Drug Development segment’s Q2 revenues is pegged at $1.33 billion, indicating a rise of 22% from the prior-year quarter’s figure.

Within LabCorp Diagnostics, in the second quarter, falling demand for COVID-19 testing is expected to have negatively impacted the volume scenario. Meanwhile, the company’s extended agreement with BML to further the development of companion diagnostics in Japan might have contributed to the growth. The LaunchPad initiative for Diagnostics too is expected to have contributed to the company’s Q2 margin.

The Zacks Consensus Estimate for LabCorp Diagnostics’ Q2 revenues is pegged at $2.3 billion, suggesting a stupendous rise of 36% from the year-ago quarter’s reported figure.

Key Q2 Estimates

The Zacks Consensus Estimate for second-quarter earnings of $3.58 per share implies a 29.5% rise from the year-ago reported figure. The consensus estimate for revenues is pegged at $3.59 billion, also suggesting 29.5% improvement from the prior-year reported number.

What Our Quantitative Model Suggests

Per our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a good chance of beating estimates. This is exactly the case as you can see:

Earnings ESP: LabCorp has an Earnings ESP of +6.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: LabCorp currently carries a Zacks Rank #2.

Other Stocks Worth a Look

Here are some medical stocks worth considering as these too have the right combination of elements to beat on earnings this reporting cycle.

Globus Medical, Inc. (GMED - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank of 2. The company is slated to release its second-quarter 2021 results on Aug 4.  You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed Inc. (RMD - Free Report) has an Earnings ESP of +2.40% and a Zacks Rank of 2, at present. The company is slated to release its fourth-quarter fiscal 2021 results on Aug 5.

Zimmer Biomet Holdings, Inc. (ZBH - Free Report) has an Earnings ESP of +2.58% and is a Zacks #2 Ranked stock. The company is slated to release its second-quarter 2021 results on Aug 3.

(NOTE: We are reissuing this article to correct a mistake. The original version, published Friday, July 23, 2021, is no longer to be relied upon.)