On Dec 21, Zacks Investment Research downgraded
Laboratory Corporation of America Holdings
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
Shares of LabCorp slid more than 12% to reach $88.25 on Dec
11, immediately after the company's announcement of a bleak
prelim 2014 outlook. This downtrend still continues and the stock
has lost over 9% in the past one-month time frame.
For 2014, the company expects to post adjusted earnings per
share (EPS) excluding amortization of $6.50, 16% below the Zacks
Consensus Estimate of $7.56 a share. The projection does not take
into account the positive impact of any share repurchase activity
Keeping in mind the challenging operating environment, the
company anticipates feeble revenue growth (of mere 2%) in the
upcoming fiscal. The current Zacks Consensus Estimate for
revenues of $5,939 million also remains ahead of the company's
The current economic uncertainty continues to adversely affect
LabCorp. The company is currently plagued by several issues like
a utilization weakness and continued increases in Americans with
high deductible and high co-insurance plans.
Moreover, ongoing government payment and reimbursement issues
along with uncertainty related to the implementation of the
Affordable Care Act are other looming headwinds. We note that
lower healthcare utilization and Medicare payment reductions have
affected LabCorp's peer
) past performances as well.
The Zacks Consensus Estimate for the fourth quarter of 2013
has declined 1.8% (2 cents) to $1.12 over the last 60 days.
The Zacks Consensus Estimate for full year 2013 decreased 0.5%
(2 cents) to $3.81 per share over the last 60 days.
Other Stocks to Consider
Better-ranked stocks in the technology sector include
Align Technology Inc.
). While McKesson carries a Zacks Rank #1 (Strong Buy), Align
holds a Zacks Rank #2 (Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
QUEST DIAGNOSTC (DGX): Free Stock Analysis
LABORATORY CP (LH): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
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