LH

Laboratory Corp Of America Holdings

Healthcare


Presented:04/11/2018
Price:$164.17
Cap:$17.02B
Current Price:$216.68
Cap:$18.19B

Presented

Date04/11/2018
Price$164.17
Market Cap$17.02B
Ent Value$23.01B
P/E Ratio13.44x
Book Value$67.03
Div Yield0%
Shares O/S103.70M
Ave Daily Vol679,741
Short Int2.71%

Current

Price$216.68
Market Cap$18.19B
Laboratory Corp. of America Holdings is a clinical laboratory company, which engages in the provision of clinical laboratory and end-to-end drug development services. It operates through the LabCorp Diagnostics and Covance Drug Development segments. The LabCorp Diagnostics segment includes core testing as well as genomic and esoteric testing. The Covance Drug Development segment involves in providing drug development solutions, to companies in the pharmaceutical and biotechnology industries. The company was founded in 1971 and is headquartered in Burlington, NC.

Publicly traded companies mentioned herein: Aetna Inc (AET), Charles River Laboratories Inc (CRL), Laboratory Corp of America Holdings (LH), Quest Diagnostics Inc (DGX), UnitedHealth Group Inc (UNH)

Highlights

The presenter is long shares of LabCorp (LH) and believes the CRO business is poised to see a positive inflection in 2018. While the lab segment is taking a hit from PAMA (the 2014 Protecting Access to Medicare Act), the larger labs are in a position to weather the storm and the pressure on smaller operators could drive consolidation that ultimately benefits LH. With the stock currently trading at $160 and just 12.4x the consensus EPS estimate for 2020, he likes the risk/reward. His base case forecast for 2020 is $13.67 of EPS (~30 cents ahead of the Street), and he believes 15x is a fair multiple. The implied target is $205 over 12 - 18 months for a 28% gain.

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Idea Discussion

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