On Dec 27, Zacks Investment Research upgraded
Laboratory Corporation of America Holdings
) to a Zacks Rank #3 (Hold).
Why the Upgrade?
LabCorp's prelim 2014 earnings projection, declared on Dec 11,
disappointed majority of the investors, leading to significant
loss in share price in the last two weeks. 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.
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 stands at $5,939 million, ahead of the company's
With the stock price at its current low, we do not expect any
further downward rally as the impact of the disappointing outlook
has already taken shape. Moreover, we are upbeat about the
company's focus on portfolio expansion to drive the top line. The
company is banking more on the high-margin esoteric testing
business, which is expected to contribute 45% of total sales in
the next 3-5 years.
In addition, the acquisition pipeline and partnerships remain
attractive. The company's recent acquisition of Medtox Scientific
will help strengthen the company's foothold in specialized
toxicology testing.Early this year, the company announced that
) entered into a 5-year agreement to select LabCorp Clinical
Trials as a preferred provider for full-service global central
laboratory services and biomarker testing.
Other Stocks to Consider
Better-ranked stocks in the technology sector include
Align Technology Inc.
). While Align carries a Zacks Rank #1 (Strong Buy), McKesson
holds a Zacks Rank #2 (Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
BRISTOL-MYERS (BMY): Free Stock Analysis
LABORATORY CP (LH): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
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