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LabCorp (LH) Strong on Strategic Planning, Competition Rife

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On Oct 10, we issued an updated research report on Laboratory Corporation of America Holdings (LH - Free Report) , popularly known as LabCorp. The stock currently carries a Zacks Rank #2 (Buy).

Over the last three months, this Burlington, NC-based healthcare diagnostics company, providing comprehensive clinical laboratory services and end-to-end drug development support, has been outperforming the broader industry. The stock has lost 2% as compared with the industry’s 4.4% decline during this period. The market seems to be upbeat about the Diagnostics business, which has delivered promising performance over the recent past in spite of persistent softness within the company’s Covance drug development business.

We are also encouraged by the successful closure of the acquisition of Chiltern International Group, a specialty contract research organization.Chiltern is a major partner serving the top 20 biopharma segments, helping the company focus on the high-growth emerging and mid-market biopharma segments.

 

 

Notably, LabCorp is steadily progressing on its three-pronged strategy to drive growth. First, the company is focusing on research and development in collaboration with academic institutions in order to gain traction in the growing lab testing market.

Second, LabCorp is increasingly deploying its integrated testing capabilities, industry leading science and innovative technology offerings to establish strategic partnerships with providers. Moreover, investors are looking forward to the long-standing strategic collaboration with 23andMe, which has already demonstrated an impressive growth trajectory.

Third, LabCorp’s core diagnostic strategy is based on innovation in data integration and in tools to support enhanced connectivity, reporting and decision support. The company is also focusing on extending its core testing capabilities beyond the traditional health care setting. On the flip side, unfavorable foreign exchange is a threat. Moreover, the company operates in a tough competitive landscape. Meanwhile, apprehensions about a tough reimbursement scenario intensifies concerns for the company.

Other Key Picks

Other top-ranked stocks in the medical sector are QIAGEN (QGEN - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) . QIAGEN, IDEXX Laboratories and Thermo Fisher carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

QIAGEN has a long-term expected earnings growth rate of 13.1%. The stock has rallied roughly 31.9% last year.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained 42.8% last year.

Thermo Fisher has a long-term expected earnings growth rate of 11.7%. The stock has gained 27.2% last year.

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