Labcorp (NYSE: LH) announced an increase in its full-year guidance for 2026, driven by strong demand for medical testing and a favorable currency environment. The medical research company now anticipates full-year adjusted earnings per share (EPS) to be between $16.05 and $16.50, an uptick from its previous projection of $15.70 to $16.40. This revised forecast is in line with analysts' consensus estimate of $16.10 EPS. The company also projects a revenue growth of 5.0% to 6.1% for the full year, a 20 basis point increase at the midpoint compared to previous guidance of 4.7% to 6.0%. Free cash flow guidance was also raised to a range of $1.13 billion to $1.28 billion, up from $1.10 billion to $1.25 billion.
The guidance upgrade follows Labcorp's strong second-quarter performance, where the company exceeded Wall Street expectations. Adjusted EPS for Q2 came in at $4.35, surpassing the anticipated $4.16 and marking an increase from $3.94 in the corresponding quarter of 2024. Total revenue for the second quarter reached $3.53 billion, beating analyst estimates of $3.49 billion, representing a 9.5% growth primarily driven by its diagnostics laboratories segment. During the first quarter, Labcorp reported $4.25 EPS, beating estimates of $4.09, on revenue of $3.54 billion, exceeding estimates of $3.51 billion.
Analysts have largely maintained a positive outlook on Labcorp. Eight equities research analysts have rated the stock with a "Buy" rating and two have issued a "Hold" rating, resulting in a consensus rating of "Moderate Buy" with a consensus target price of $315.33. Recent adjustments include Bank of America raising its price target from $300.00 to $320.00 with a "buy" rating on July 13th, and Robert W. Baird increasing its target from $335.00 to $338.00 with an "outperform" rating on the same day. Evercore also reissued an "outperform" rating with a $300.00 target price on April 8th.
Labcorp's financial health indicators include a return on equity of 16.29% and a net margin of 6.66% for the first quarter. The company also announced a quarterly dividend of $0.72 per share, payable on September 11th to shareholders of record by August 28th. This represents an annualized dividend of $2.88, yielding 0.9%, with a dividend payout ratio (DPR) of 25.51%. The company's cash and cash equivalents balance at the end of the second quarter was $0.65 billion, with total debt at $5.58 billion. The stock has seen significant appreciation, up 16% year-to-date and over 27% in the past 12 months, with some retail investors expressing optimism for a rally towards $330.
