DoD tests AI models that make it easy to switch from vendors like Palantir
On Wednesday, Redburn-Atlantic initiated coverage on Laboratory Corporation of America (NYSE:LH), commonly known as Labcorp, with an optimistic outlook, assigning the stock a Buy rating and setting a price target of $276.00. The firm’s analysts highlighted Labcorp, currently valued at $19.47 billion, as their top choice within the diagnostics sector. Their bullish stance aligns with the broader analyst consensus of Buy and price targets ranging from $232 to $300. According to InvestingPro data, the company’s attractive PEG ratio of 0.31 supports the firm’s valuation thesis versus competitors like Quest Diagnostics (NYSE:DGX).
The analysts at Redburn-Atlantic pointed out that Labcorp’s valuation is slightly less expensive both on an absolute basis and relative to the S&P 500 index. They also noted Labcorp’s lower leverage compared to Quest Diagnostics, which could potentially offer Labcorp greater flexibility for mergers and acquisitions (M&A) activities.
Redburn-Atlantic’s forecast for Labcorp includes an organic revenue growth of 2-3% annually, with the lower end of the range accounting for the possible impact of PAMA (Protecting Access to Medicare Act) price reductions anticipated between 2026 and 2028. Additionally, the analysts expect Labcorp to spend approximately $450 million each year on acquisitions, which they believe could contribute an extra 1-1.5% to the company’s revenue growth.
Combining these factors, Redburn-Atlantic projects a compound annual growth rate (CAGR) of 3-4% for Labcorp’s diagnostic revenue from 2025 to 2028E. This growth projection reflects the firm’s confidence in Labcorp’s strategic positioning and its ability to capitalize on market opportunities through both organic expansion and targeted acquisitions.
In other recent news, Laboratory Corporation of America (LabCorp) has announced several strategic developments. LabCorp reported an agreement to acquire oncology-focused laboratory testing assets from BioReference Health for $192.5 million, with potential additional payments up to $32.5 million. This acquisition, expected to close in the second half of 2025, is projected to immediately boost LabCorp’s earnings and is part of a broader strategy to enhance its presence in oncology testing. The assets currently generate approximately $85 million to $100 million in annual revenue.
In financial updates, Truist Securities reiterated a Buy rating for LabCorp with a $285 price target, highlighting the company’s robust cash flow and strategic acquisitions. Meanwhile, Citi upgraded LabCorp’s stock from Neutral to Buy, raising the price target to $300, citing strong utilization rates in the Labs industry and the company’s potential to benefit from these trends. Additionally, LabCorp introduced the Labcorp Plasma Complete test, a liquid biopsy for advanced cancer care, designed to aid oncologists in creating personalized treatment plans. This test is now clinically available and integrates with LabCorp’s existing cancer diagnostic services, offering comprehensive genomic profiling for patients with advanced solid tumors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.