Labcorp (LH Quick QuoteLH - Free Report) shares have rallied 25.6% in the past year, reflecting sustained momentum and outperforming the industry’s 16.2% fall and the S&P 500 composite’s 9.1% gain.

Carrying a Zacks Rank #3 (Hold) at present, the laboratory service provider is concentrating more on areas that represent major growth opportunities and are expected to grow significantly faster than other therapeutic areas. It maintains a solid pipeline of potential acquisitions that fit its financial strategy and will enhance its organic growth. Additionally, the success of the LaunchPad initiative and a solid financial footing are highly encouraging for the company.

Based in Burlington, NC, Labcorp offers a broad range of laboratory services to help doctors, hospitals, pharmaceutical companies, researchers and patients make informed and timely decisions. The company continues to expand in the rapidly evolving healthcare market by bolstering its position across its core capabilities, growing strategic opportunities that drive new businesses and focusing on areas that uniquely differentiate its financial performance.  Labcorp continues to add to its pipeline of specialty diagnostics, acting on the vast international expansion opportunity.

Factors Favoring LH’s Growth

The rally in the share price can be linked to the company’s strong execution of its strategic priorities. By leveraging its acquisitions and strategic partnerships, Labcorp harnesses science, technology and innovation across the organization to lead in these important therapeutic areas — oncology, women's health, autoimmune disease and neurology.

In 2024, Labcorp enhanced its neurodegenerative diseases testing capabilities with two blood-based biomarkers — pTau217 for Alzheimer's disease diagnosis and monitoring, and GFAP (glial fibrillary acidic protein) for early detection of neurodegenerative diseases and neurological injuries. The company also launched the Labcorp Plasma Detect molecular residual disease (MRD) solution, enhancing its leadership in precision oncology.

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As part of its focus on autoimmune disease, Labcorp launched a multiple sclerosis monitoring profile to monitor neurofilament light chain serum and GFAP values in multiple sclerosis patients. It introduced the first CDx assay to identify gastric cancer patients eligible for targeted treatment with VYLOY. Furthermore, several consumer-initiated tests made their debut through the Labcorp OnDemand platform, including homocystine for heart health, vitamin A, vitamin C and vitamin E.

In the first quarter of 2025, Labcorp invested $211 million in acquisitions and partnerships to support its strategic growth initiatives. The company completed the acquisition of key assets from North Mississippi Health Services' Ambulatory Outreach Laboratory business and became the referral lab for its seven hospitals and clinical laboratories.  Furthermore, the acquisition of select Invitae assets last year enhanced Labcorp’s specialty testing capabilities, utilizing genetic data to improve clinical trials and treatment approaches in oncology and select rare diseases. Other key acquisitions include Lab Works’ molecular testing site in Alabama, Ballad Health’s outreach labs and assets from MAWD Pathology Group.

In terms of operational efficiency, Labcorp’s LaunchPad initiative hit the annual target of $100-$125 million in savings in 2024. LaunchPad focused on margin expansion through facility and workforce optimization, technology upgrades, acquisition integration and process redesign, which positively impacted results in the first quarter of 2025.

Financially, Labcorp remains solid with cash and cash equivalents of $369 million as of the March-end, with zero short-term debt. The company also paid out $62 million in dividends, boasting a dividend payout ratio of 40.4%.

Concerns for LH

In recent times, volatilities in global economic conditions, including inflation, have significantly reduced the demand for diagnostic testing and drug development services across patients, physicians, hospitals, medical device companies and others, affecting Labcorp’s performance. A fierce competitive landscape, in terms of both pricing and revenues, is also a concern.

A Glance at Estimates for LH

The Zacks Consensus Estimate for Labcorp’s 2025 and 2026 earnings per share (EPS) is expected to increase 10.2% and 9.5%, respectively, to $16.05 and $17.56. In the past 60 days, the Zacks Consensus Estimate for the company's 2025 EPS has risen 0.2%.

Meanwhile, the company’s revenues in 2025 are projected to grow 6.9% to $13.90 billion, followed by a 4.7% increase to $14.56 billion in 2026.

Top MedTech Stocks

Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC Quick QuotePAHC - Free Report) , Hims & Hers Health (HIMS Quick QuoteHIMS - Free Report) and Cencora (COR Quick QuoteCOR - Free Report) .

Phibro Animal Health has an estimated long-term earnings growth rate of 26% compared with the industry’s 15.7%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. Its shares have rallied 39.9% compared with the industry’s 9.6% growth in the past year.

PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hims & Hers Health, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 1.3% against the industry’s -10.1% yield. Shares of the company have surged 137.4% compared with the industry’s 36.5% gain. HIMS’ earnings surpassed estimates in two of the trailing four quarters, matched on one occasion and missed on another, the average surprise being 2.8%.

Cencora, carrying a Zacks Rank #2 at present, has an earnings yield of 5.4% compared with the industry’s 3.8%. Shares of the company have rallied 23.6% against the industry’s 16.2% decline. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%.