Labcorp Holdings Inc.
LHLaboratory Corporation of America Holdings (LH) operates in the medical laboratory services industry.
It ranks as a global leader in life sciences and diagnostic testing, serving a broad client base of physicians, hospitals, and pharmaceutical companies.
Updated: February 19, 2026, 16:00 EST
Investment Opinion: Should I buy LH Today?
Technical Analysis
LH demonstrates strong positive momentum with steady gains outperforming the broader market. Trading in the upper quartile of its 52-week range, it remains closer to its yearly high, indicating an uptrend supported by gradual appreciation rather than being severely overbought. The consistent relative strength over recent periods reflects sustained investor confidence.
Fundamentals
LH maintained solid profitability with an 11.4% operating margin in Q4 2025, though net profit margin declined due to higher expenses. While debt levels are moderate at a 35.5% debt ratio, the negative interest coverage ratio signals short-term concerns regarding interest payment capacity. Operational efficiency appears limited, with low return on equity and asset turnover suggesting room for improvement in capital utilization.
Valuation
The stock appears overvalued with a forward P/E substantially higher than the trailing P/E, implying weaker future earnings expectations. An extremely high EV/EBITDA ratio near 100 further underscores that enterprise value is not well-supported by operational cash flow. Without peer data, the assessment is isolated but still points to rich valuation levels.
Risk
LH’s beta near 1.0 means volatility is aligned with the broader market, and a -17.36% maximum drawdown indicates manageable historical downside risks. The lack of significant short interest is reassuring, though sector-specific risks like regulatory changes could impact performance.
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**Recommendation: HOLD**
LH shows technical strength and respectable operational margins, but current valuation appears stretched without compelling earnings growth to justify it. The negative interest coverage ratio introduces financial risk, while modest operational efficiency metrics suggest limited upside from current levels. Investors may want to wait for a more attractive entry point or clearer signs of earnings improvement before committing.
LH 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Based on the provided analysis, here is a 12-month outlook for Laboratory Corporation of America (LH):
12-Month Outlook for LH
LH's outlook is balanced, with its strong technical momentum and solid operational margins countered by significant valuation concerns. Key catalysts for potential upside include sustained investor confidence driving the current uptrend and any improvement in operational efficiency that could boost earnings. Major risks center on its stretched valuation metrics, which lack earnings growth support, and the near-term financial risk indicated by the negative interest coverage ratio. Given the absence of a specific analyst target and the "Hold" recommendation, a cautious target range would be relatively narrow, likely between $260 and $290, reflecting the tug-of-war between its positive momentum and valuation headwinds.
Wall Street Consensus
Most Wall Street analysts are optimistic about Labcorp Holdings Inc.'s 12-month outlook, with consensus target around $282.48, indicating expected upside potential.
Bulls vs Bears: LH Investment Factors
Overall, LH has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Board Addition with Strong Leadership: New board member brings 25+ years of healthcare leadership from Novartis' $20B unit.
- Business Expansion in Specialty Testing: Company continues to grow in high-demand areas like oncology and women's health.
- Institutional Investor Confidence: Caprock Group recently acquired a new stake, showing institutional belief in the company.
- Solid Earnings Performance: Q4 2025 earnings exceeded expectations despite revenue challenges.
- Strong Relative Performance: Stock has quietly outperformed many healthcare peers with steady total returns.
Bearish
- Q4 Revenue Miss: Company fell short of revenue forecasts in Q4 2025, causing stock decline.
- Mixed Financial Results: Q4 results were mixed with earnings beat overshadowed by revenue weakness.
- Stock Price Decline Post-Earnings: Shares dropped nearly 3% following disappointing Q4 revenue report.
- Valuation Concerns: Recent price climb raises questions about whether stock is fairly valued.
LH Technical Analysis
LH has demonstrated strong positive momentum with consistent outperformance against the broader market over recent periods.
The stock has posted solid 1-month and 3-month gains of approximately 3%, notably outperforming the market by a similar margin over three months, indicating sustained relative strength. This steady upward trajectory suggests positive investor sentiment and momentum.
Currently trading at $276.67, LH sits in the upper quartile of its 52-week range, approximately 32% above its low but still 6% below its high. Positioned closer to the yearly peak than the trough, the stock appears to be in a strong uptrend rather than severely overbought, supported by its gradual appreciation.
| Period | LH Return | S&P 500 |
|---|---|---|
| 1m | +4.1% | +1.0% |
| 3m | +5.5% | +1.9% |
| 6m | +4.9% | +6.5% |
| 1y | +13.4% | +12.1% |
| ytd | +12.2% | +0.2% |
LH Fundamental Analysis
Revenue & Profitability LH generated sequential quarterly revenue decline but maintained solid profitability metrics in Q4 2025. The net profit margin of 4.7% remains respectable, though it declined from 7.3% in the previous quarter due to higher other expenses. Operating margins held relatively stable at 11.4%, indicating core business efficiency.
Financial Health The company maintains a conservative debt position with a debt ratio of 35.5% and adequate liquidity shown by current and quick ratios above 1.2. However, the negative interest coverage ratio raises concerns about short-term interest payment capacity despite moderate overall leverage.
Operational Efficiency Operational efficiency appears challenged with a low return on equity of 1.9% and modest asset turnover of 0.19. The cash conversion cycle of 43 days indicates reasonable working capital management, though fixed asset turnover of 1.14 suggests potential underutilization of long-term assets.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Based on the available valuation metrics, LH appears overvalued despite a discounted forward-looking valuation implied by its negative PEG ratio. The forward P/E ratio of 31.4 is significantly higher than the trailing twelve months (TTM) P/E of 26.8, suggesting market anticipation of lower future earnings, which is a concern. Furthermore, an extremely high EV/EBITDA ratio of nearly 100 indicates the company's enterprise value is lofty relative to its core operational cash flow, reinforcing the overvalued assessment.
A peer comparison cannot be performed as industry average data is unavailable. Without this context, it is impossible to determine if LH's valuation multiples are high or low relative to its competitors in the healthcare diagnostics and research industry. The analysis is therefore limited to an absolute assessment of the company's own metrics.
Investment Risk Disclosure
Volatility Risk: LH exhibits moderate volatility risk with a beta near 1.0, indicating its price movements tend to closely mirror the broader market. The 1-year maximum drawdown of -17.36% reflects a significant but not extreme historical loss, suggesting investors should expect periods of meaningful downside pressure correlated with overall market downturns.
Other Risks: The absence of notable short interest indicates a lack of significant speculative pressure betting against the stock, which is a positive sentiment indicator. However, investors should consider other company-specific factors such as regulatory changes in the healthcare sector or shifts in laboratory testing volumes that could impact performance.
FAQs
Neutral view - LH presents a mixed picture that requires careful consideration. While technical momentum remains strong and analyst sentiment is positive, concerning valuation metrics (forward P/E of 31.4, extremely high EV/EBITDA) and recent revenue misses create headwinds. The conservative debt profile and institutional confidence are offset by weak operational efficiency metrics. Suitable for: Patient investors with moderate risk tolerance who believe in the long-term healthcare diagnostics story and can withstand potential short-term volatility.
Based on the metrics provided, LH appears overvalued. Its trailing P/E of 26.8 and particularly its high Forward P/E of 31.4 suggest the market has elevated expectations for future performance that may not be justified. This overvaluation is reinforced by a negative PEG ratio of -0.87, which implies that the company's earnings growth is either negative or failing to justify its P/E multiple. Furthermore, an EV/EBITDA ratio nearing 100 is exceptionally high and indicates the company's enterprise value is extremely lofty relative to its actual operating cash flow. The solid profitability and financial health do not sufficiently offset these concerning valuation multiples.
Based on the provided information, here are the key risks of holding LH stock, ordered by importance:
1. Financial Risk: The company faces a short-term liquidity strain, as indicated by a negative interest coverage ratio, which raises concerns about its immediate ability to service its debt obligations despite having a moderate overall debt level. 2. Business/Operational Risk: Weak operational efficiency, evidenced by a low return on equity of 1.9% and modest asset turnover, suggests potential challenges in profitably utilizing shareholder capital and company assets. 3. Market Risk: The stock carries moderate market risk, with a beta near 1.0 indicating its price is susceptible to downturns in the broader market, as historically shown by a maximum drawdown of -17.36%. 4. Industry/Business Risk: The company's performance is vulnerable to industry-specific headwinds, such as regulatory changes in the healthcare sector or declines in laboratory testing volumes, which could impact revenue.
Based on the current analysis for Laboratory Corporation of America (LH) and its trajectory toward 2026, my forecast is as follows.
My target price range for 2026 is $280 to $320, with a base case of $290 and a bull case requiring improved earnings growth. Key growth drivers include leveraging stable operational margins to counter revenue volatility and potential market share gains from industry consolidation. The main assumptions are that the company maintains its financial discipline and that macroeconomic pressures on the healthcare sector do not intensify. This forecast is highly uncertain due to the current disconnect between its valuation and earnings momentum, making future performance heavily dependent on demonstrated financial improvement.