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On Thursday, Jefferies analyst Tycho Peterson updated the financial outlook for Laboratory Corporation of America (NYSE:LH), increasing the price target to $290 from $275 while maintaining a Buy rating on the stock. The company, currently trading near its 52-week high of $258.59 and maintaining a "GOOD" financial health score according to InvestingPro, saw its fourth-quarter revenues and earnings per share (EPS) exceed expectations, although margins were slightly impacted by transient items. The strong free cash flow (FCF) was also highlighted.
Laboratory Corporation of America, with a substantial market capitalization of $20.75 billion, reported robust financial results, with fourth-quarter earnings that outperformed forecasts. While margins did not meet expectations due to certain temporary factors, the company demonstrated a strong free cash flow position, with levered free cash flow reaching $843.2 million in the last twelve months.
Looking forward, Peterson expressed optimism about Laboratory Corporation of America’s guidance for 2025, which anticipates higher top-line growth. The projected EPS growth of 10% at the midpoint is in line with expectations. The analyst pointed to the Early Development segment showing signs of improvement and the ongoing NVTA deal, which is expected to contribute positively to the company’s financials in the second half of 2025.
The analyst believes that Laboratory Corporation of America’s stock remains appealing, especially considering the diagnostic (Dx) business’s potential to provide a buffer against the volatility often seen in the broader healthcare sector. Peterson reaffirmed a Buy rating for the stock and adjusted the price target to reflect the company’s promising financial trajectory.
In other recent news, Labcorp Holdings Inc. has expanded its credit facilities from $300 million to $700 million, providing the company with increased financial flexibility. The amendment introduces MUFG Bank Ltd. and The Toronto-Dominion Bank (TSX:TD) as committed purchasers under the agreement. Meanwhile, Labcorp’s stock has been upgraded to "Outperform" by Evercore ISI analysts, with a raised price target of $265. They anticipate robust laboratory volume growth and an expected accretive contribution from Invitae (OTC:NVTAQ) in the latter half of 2025.
In response to a multistate outbreak of H5 bird flu, Labcorp has released a new molecular test to aid in diagnosing human infections with the H5N1 virus. The test, developed in collaboration with the U.S. Centers for Disease Control and Prevention, is now available for healthcare professionals to order. Jefferies has initiated coverage on Labcorp with a "Buy" rating and a price target of $275, highlighting the company’s emergence from a period of significant challenges due to COVID-19.
Baird has revised its price target for Labcorp to $286.00, maintaining an "Outperform" rating on the company’s stock. The firm’s analyst expressed bullish sentiments on the laboratory sector and Labcorp’s relative valuation. These developments reflect recent changes in Labcorp’s financial strategy, analyst ratings, and response to public health issues.
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