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Laboratory Corp.: Rate On Capital Deployed Contracting, Hold

Zach Bristow profile picture
Zach Bristow


  • Laboratory Corporation of America Holdings is selling at its lowest range since 2021, continuing a 2-year downtrend.
  • LH's economics have weakened since the pandemic, producing low returns on capital deployed.
  • The company's competitive advantage period has been shrinking, and its valuation factors suggest limited upside.
  • Net-net, reiterate hold.

bad day at wall street


Investment summary

Since the June publication, there have been multiple investment updates for Laboratory Corporation of America Holdings (NYSE:LH), but the central themes remain in situ. LH now sells at its lowest range since 2021, in continuation of a

This article was written by

Zach Bristow profile picture
Strategist, global markets, at Bernard Holdings. Objective view on the directional bias of markets. Technical expertise bridges the complex relationships between value drivers, capital flows and price action. Clients are represented over the cross-section of financial markets, from speculators, hedgers, long-term traders and the public. Research covers investment securities and futures markets.Shoot me a message to talk trade ideas or portfolio construction. Disclaimer:All research is strictly for informational purposes only. Not to be considered investment advice. Please remember to conduct your own due diligence.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

RatherBeWithMyDog profile picture
Thanks yet again @Zach Bristow for introducing me to another interesting name in the Life Sciences space, at a different point in the healthcare value chain vs. my current positions (TMO, WST, CVS, MDT). I’ll be diving a little deeper but at first blush, LH feels like a great addition to my DGI portfolio—I love taking a chance on recent dividend payers as the potential for long-term wealth compounding is significant. In a non-obvious way, LH reminds me of URI (which I also own) as both operate in a virtual duopoly in a highly fragmented space with significant long-term consolidation opportunities, and dividend growth potential. Construction rentals and lab diagnostics being polar opposite businesses notwithstanding 😀
Zach Bristow profile picture
@RatherBeWithMyDog great to hear of the allocations. Also great to hear the portfolio is doing so well. Sensible reasoning btw. Hope you’re off to a great start to the week.
Value Digger profile picture
@Zach Bristow LH's valuation at $200 per share is very high. So I project that it will underperform in the foreseeable future.
Zach Bristow profile picture
@Value Digger thanks for the additions. I agree.
Value Digger profile picture
@Zach Bristow Good article.

When it comes to the diagnostics industry, Fonar (FONR) is an MRI company that has the lowest key multiples EV-to-adj. EBITDA and EV-to-Revenue compared to its peers RDNT, DGX, LH etc.

FONR also is debt-free, cash-rich and consistently profitable:

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