Last Update 14 Dec 25
LH: AI Cancer Diagnostics And Share Repurchases Will Drive Future Upside
Analysts have modestly reaffirmed their outlook on Labcorp Holdings, maintaining the price target effectively unchanged at approximately $300 per share. They continue to see a stable balance of revenue growth, profit margins, and valuation multiples.
What's in the News
- Labcorp Plasma Detect, a tumor-informed blood test for molecular residual disease, was featured in Nature Medicine and Clinical Cancer Research, with studies showing its potential to track early disease progression and predict long term survival in diffuse pleural mesothelioma and to improve post surgical monitoring in head and neck cancer (peer reviewed journals).
- Labcorp and Lunit launched a collaboration to apply AI driven digital pathology to oncology research and clinical care, using whole slide imaging and spatial profiling to better characterize tumor immune microenvironments and refine precision immuno oncology strategies (company announcement).
- Labcorp lowered its full year 2025 revenue growth guidance to a range of 7.4% to 8.0%, down from the prior 7.5% to 8.6%. This signals a slightly more cautious outlook on top line expansion (company guidance).
- The company completed a tranche of its share repurchase program, buying back 100,000 shares in the third quarter of 2025 and reaching a total of about 16% of shares retired since the buyback was announced in 2021 (company filing).
- Labcorp announced plans to offer Roche's FDA cleared Elecsys pTau181 blood test nationwide by early 2026, expanding access in primary care to a less invasive biomarker tool to help rule out Alzheimer's related amyloid pathology in older adults with cognitive decline (company announcement).
Valuation Changes
- Fair Value: Remains effectively unchanged at approximately $300 per share, indicating no material adjustment to intrinsic value estimates.
- Discount Rate: Edged down marginally from 6.956% to about 6.956%, reflecting an immaterial shift in the cost of capital assumption.
- Revenue Growth: Ticked down very slightly from 4.80% to about 4.80%, implying a virtually unchanged long term growth outlook.
- Net Profit Margin: Increased fractionally from roughly 8.55% to 8.55%, signaling a negligible uplift in expected profitability.
- Future P/E: Held steady at around 21.66x, suggesting no change in the valuation multiple applied to forward earnings.
Key Takeaways
- Strategic collaborations and acquisitions are expected to drive growth in high-growth therapeutic areas and partnerships with health systems.
- Introduction of innovative tests and tech enhancements is anticipated to improve margins and earnings, with initiatives offsetting rising personnel costs.
- Tariffs, regulatory changes, and competitive pressures could negatively affect Labcorp's revenue growth, margins, and earnings amidst global economic shifts and market challenges.
Catalysts
About Labcorp Holdings- Provides laboratory services.
- Labcorp's strategic collaborations and acquisitions, such as with Inspira Health and BioReference Health, are expected to drive revenue growth by expanding its presence in high-growth therapeutic areas like oncology and strengthening partnerships with health systems.
- The introduction of innovative tests in oncology, women's health, autoimmune disease, and neurology is anticipated to capture more test volume and outpace growth in the broader market, positively impacting revenue and earnings.
- The use of AI and technology innovations is enhancing operational efficiencies, improving margins through platforms like eClaim Assist and Labcorp Diagnostic Assistant.
- The Invitae integration is on track to be slightly accretive to earnings for the full year, contributing to overall margin expansion and earnings growth.
- Labcorp's LaunchPad initiative continues to produce expected cost savings, mitigating higher personnel costs and supporting margin expansion.
Labcorp Holdings Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Labcorp Holdings's revenue will grow by 5.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 5.7% today to 8.3% in 3 years time.
- Analysts expect earnings to reach $1.3 billion (and earnings per share of $16.62) by about September 2028, up from $763.4 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.4x on those 2028 earnings, down from 30.3x today. This future PE is greater than the current PE for the US Healthcare industry at 21.0x.
- Analysts expect the number of shares outstanding to decline by 0.64% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
Labcorp Holdings Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The impact of tariffs and regulatory changes could create cost pressures, affecting Labcorp Holdings' overall revenue growth and net margins, as they must either absorb costs or pass them on to customers.
- Ongoing shifts in the macroeconomic landscape, such as foreign exchange volatility and global economic conditions, could adversely impact Labcorp's revenue and earnings projections.
- The potential financial implications of PAMA (Protecting Access to Medicare Act) could lead to a $100 million impact on revenue, affecting net earnings if the legislation goes into effect without a delay or amendment.
- Competitive pressures in the Diagnostic Laboratories sector may affect pricing and margins, impacting Labcorp's revenue and net margins as contracts come up for renewal or new competitive bids are issued.
- The unpredictability and possible delays in clinical trial starts, due to regulatory review processes and biopharma R&D funding, could impact the Biopharma Laboratory Services segment's revenue and earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $293.765 for Labcorp Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $325.0, and the most bearish reporting a price target of just $260.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $15.6 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 22.4x, assuming you use a discount rate of 6.8%.
- Given the current share price of $278.11, the analyst price target of $293.76 is 5.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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