Is This the Right Time to Add Labcorp Stock to Your Portfolio?
Labcorp Holdings Inc. LH, or Labcorp, is expanding in high-growth specialty testing markets while broadening its consumer testing business. Acquisitions, health-system relationships and new contracts are boosting the company’s reach and supporting growth. The company also continues to leverage artificial intelligence (AI), automation and operational initiatives to strengthen productivity and margins. Meanwhile, macroeconomic uncertainty and changing reimbursement policies could pressure Labcorp’s testing volumes, costs and cash flow.
Year to date, this Zacks Rank #3 (Hold) stock has risen 23.4% compared with the 4.8% growth of the industry and a 12.7% rise of the S&P 500 composite.
The renowned healthcare diagnostics company has a market capitalization of $25.11 billion. Labcorp’s earnings yield of 5.9% favorably compares with the industry’s 3.7% yield. In the trailing four quarters, the company delivered an average earnings surprise of 3.1%.
Let’s delve deeper.
Tailwinds for Labcorp
Targeted Development in High-Growth Areas: Labcorp continues to expand in specialty testing areas such as oncology, women’s health, autoimmune disease and neurology. These areas delivered double-digit revenue growth during the first half of 2026 and helped the company win new health-system and provider customers. In oncology, Labcorp launched ColoSense nationwide, expanded companion diagnostic access for prostate cancer and added an advanced DPYD genotyping test. It also entered into a clinical trial collaboration to evaluate Plasma Detect Genome MRD in patients at risk of early-stage lung cancer recurrence. The consumer business maintained double-digit growth, supported by Labcorp OnDemand, Marker by Labcorp and new at-home testing options. Specialty patients also tend to require more tests over time, supporting continued growth in tests per accession and favorable mix.
Image Source: Zacks Investment Research
Strategic Acquisitions and Partnerships to Drive Growth: Labcorp continues to build relationships with health systems and regional laboratories, expanding its patient network and access to specialty testing. During the second quarter of 2026, the company completed acquisitions of select Parkview Health outreach laboratory services and Tribal Diagnostics. It also secured another Department of Defense contract to provide testing across military hospitals worldwide. Net acquisitions added 1.2% to enterprise revenue growth and 1.9% to Diagnostics growth during the quarter. Labcorp invested $225.7 million in acquisitions, and management described the deal pipeline as very active. The expanded collaboration with Epic also places more than 6,500 Labcorp tests on the Aura platform, simplifying access for healthcare providers and supporting deeper integration with health-system customers.
Focus on Operational Efficiency: Labcorp is using technology, automation and artificial intelligence to improve productivity and customer access. Enterprise adjusted operating margin expanded 70 basis points year over year to 15.8% in the second quarter of 2026. Diagnostics margin increased 50 basis points to 18%, while BLS margin rose 130 basis points to 17%. Management attributed the gains to organic growth, operating efficiencies and actions within Early Development. The Launchpad program remains on track, and management expects enterprise, Diagnostics and BLS margins to improve for full-year 2026. Labcorp also launched the AI-powered MyLabcorp application, enhanced scheduling at patient service centers and expanded its Epic collaboration.
What Ails Labcorp?
Macroeconomic and Cost Risks: Labcorp depends on testing demand from patients, physicians, hospitals and biopharmaceutical customers. Economic volatility, inflation, geopolitical disruption and tariffs can affect customer spending, supply costs and laboratory operations. The cost of revenues increased 5.6% year over year in the second quarter of 2026 and 5.4% during the first half. Although margins expanded, continued cost inflation could require further productivity gains or pricing actions to protect profitability.
Reimbursement and Cash-Flow Constraints: Changes in government and third-party reimbursement remain a risk for the company’s Diagnostics arm. Management estimated that Affordable Care Act-related changes reduced second-quarter 2026 diagnostic volume by 20-30 basis points and continues to assume a 30-basis-point full-year impact. The affected payer group represents less than 4-5% of diagnostic volume, but further coverage changes could weaken utilization or collections.
LH Stock Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Labcorp’s 2026 earnings per share (EPS) has edged up 0.2% to $18.32.
The Zacks Consensus Estimate for 2026 revenues is pegged at $14.75 billion, implying 5.7% growth relative to the 2025 figure.
Key Picks
Some better-ranked stocks in the broader medical space are Veracyte VCYT, Phibro Animal Health PAHC and Globus Medical GMED.
Veracyte has an earnings yield of 4.7% against the industry’s negative 1.4% yield. Shares of the company have risen 35.3% compared with the industry’s 4.5% growth. VCYT’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 41.8%.
VCYT sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Phibro Animal Health, sporting a Zacks Rank #1, has an earnings yield of 10.2% compared with the industry’s 2.5% yield. Its earnings beat estimates in each of the trailing four quarters, the average surprise being 18.4%. PAHC shares have fallen 8.9% against the industry’s 28% decline over the past year.
Globus Medical, sporting a Zacks Rank #1, has an earnings yield of 6.8% against the industry’s negative 1.7% yield. Its earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 27.9%. GMED shares have rallied 32.6% compared with the industry’s 4.5% growth over the past year.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Labcorp Holdings Inc. (LH) : Free Stock Analysis Report
Globus Medical, Inc. (GMED) : Free Stock Analysis Report
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
Veracyte, Inc. (VCYT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
