Laboratory Corporation of America Holdings LH, also known as LabCorp, is slated to report first-quarter 2021 results on Apr 29, before market open.
In the last reported quarter, the company’s adjusted earnings of $10.56 exceeded the Zacks Consensus Estimate by 31.18%. The company beat estimates in each of the trailing four quarters, the average surprise being 88.58%.
Factors at Play
LabCorp seems to be well poised on its three key strategies — delivering advanced diagnostics, bringing new medicines to patients faster and using technology to improve patient care.
Over the past few months, the company has started witnessing continued sales rebound in volumes of base testing. However, like other industry participants, the company’s first-quarter base-business performance is expected to have registered a slower recovery rate compared to the fourth quarter. This is because the company might have faced the impact of lesser patient visits through the months of the first quarter due to the resurgence of COVID-19 infections across the country.
Laboratory Corporation of America Holdings Price and EPS Surprise
Laboratory Corporation of America Holdings price-eps-surprise | Laboratory Corporation of America Holdings Quote
With respect to the company’s COVID-19 testing services wing, although extensive vaccine rollout programs are ongoing, the resurgence of the virus might have once again boosted testing demand.
Within Covance Drug Development, the first-quarter results are expected to reflect broad-based revenue growth, including COVID vaccine and therapeutic studies. Net orders and net book-to-bill are expected to have remained strong on solid demand for PCR testing. The company recently became the first to offer an at-home PCR collection kit with or without a prescription through Pixel by Labcorp. This is expected to have strongly contributed to the company’s Q1 results. Strong execution of LaunchPad savings might have improved the Q1 margin.
The Zacks Consensus Estimate for Covance Drug Development segment’s Q1 revenues is pegged at $1.29 billion, indicating a rise of 12.8% from the prior-year quarter’s figure.
Within LabCorp Diagnostics,in the first quarter, growing demand for COVID-19 testing is expected to have strongly contributed to organic volume improvements. Meanwhile, the company’s extended agreement with BML to further the development of companion diagnostics in Japan might have contributed to the growth. However, there are still negative impacts of COVID-19 on organic Base Business volume.
The LaunchPad initiative for Diagnostics too is expected to have contributed to the company’s Q1 margin.
The Zacks Consensus Estimate for LabCorp Diagnostics’ Q1 revenues is pegged at $2.62 billion, suggesting a stupendous rise of 53.6% from the year-ago quarter’s reported figure.
Key Q1 Estimates
The Zacks Consensus Estimate for first-quarter earnings of $7.32 per share implies a 208.9% rise from the year-ago reported figure. The consensus estimate for revenues is pegged at $3.88 billion, suggesting 37.2% improvement from the prior-year reported number.
What Our Quantitative Model Suggests
Per our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a good chance of beating estimates. This is exactly the case as you can see:
Earnings ESP: LabCorp has an Earnings ESP of +0.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: LabCorp currently carries a Zacks Rank #3.
Other Stocks Worth a Look
Here are some other medical stocks also worth considering as these too have the right combination of elements to beat on earnings this reporting cycle.
Elanco Animal Health Incorporated ELAN currently has a Zacks Rank #2 and an Earnings ESP of +1.90%. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCA Healthcare, Inc. HCA has an Earnings ESP of +8.91% and a Zacks Rank of 2, at present.
Avenue Therapeutics, Inc. ATXI has an Earnings ESP of +16.67% and a Zacks Rank of 2, at present.
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Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
