Reasons to Add Labcorp Stock to Your Portfolio Right Now

Labcorp Holdings Inc. LH, or Labcorp, is well-poised to grow in the coming quarters, courtesy of its Biopharma Laboratory Services (“BLS”) segment’s robust growth. A strong focus on operational efficiency adds to its appeal. Also, robust solvency looks encouraging. Yet, macroeconomic challenges may hinder the company’s full growth potential.In the past year, this Zacks Rank #2 (Buy) stock has risen 24.1% against a 17.9% decline of the industry. It has also outpaced the S&P 500 composite’s 18.7% growth.The renowned healthcare diagnostics company has a market capitalization of $23.04 billion. LH has an earnings yield of 5.8% compared with the industry’s 4.2%. Labcorp beat on earnings in each of the trailing four quarters, the average surprise being 2.5%.Let’s dive deeper.Tailwinds for LabcorpBLS Expansion Continues: This business is benefiting from collaborations with leading pharmaceutical and biotechnology companies with whom it started working on potential antivirals, treatments, and vaccines. In the second quarter of 2025, the segment grew 11% year over year, driven by 8% growth in Central Laboratories and a 20% increase in the Early Development business. Labcorp has already established itself as a key partner to biopharma in CDx, supporting the international expansion of specialized diagnostics.  As its pipeline grows, the company aims to leverage its scientific leadership in new markets through a unique set of capabilities, including a global central laboratory footprint and deep customer relationships in diagnostics and biopharma laboratory services.Focus on Operational Efficiency: Labcorp is focused on enhancing customer and employee experiences and leveraging technology to drive ongoing operational and process efficiencies. In 2021, the company launched its business process improvement initiative, LaunchPad, and supported the 20-basis-point (bps) improvement in the adjusted operating margin in the second quarter. Furthermore, the company is introducing new operational efficiencies designed to enhance margins. These include the Labcorp Diagnostic Assistant, a digital solution integrated intoelectronic health record that supports providers with real-time access to comprehensive laboratory data, insights and self-service capabilities. Labcorp also launched eClaim Assist, a next-generation digital platform that introduces smarter workflows to improve efficiencies in billing, payer alignment and denials.Solvency, Buybacks, and Dividends: Labcorp boasts a sound financial health, ending the second quarter of 2025 with cash and cash equivalents of $793 million and short-term debt of $500 million. Long-term debt was $5.08 billion compared with $5.47 billion at the end of the first quarter. The company had a times interest earned ratio of 5.3%, consistent with the previous quarter. Labcorp also returns capital to shareholders through its share repurchase program and dividends. During the quarter, it paid $59.9 million in dividends and repurchased $200.0 million of stock. The dividend payout ratio was 19% at the quarter's end.Image Source: Zacks Investment ResearchHeadwind for LabcorpMacroeconomic Risks: Labcorp’s operations are heavily dependent on the demand for diagnostic testing and drug development services. In recent times, volatilities in global economic conditions, including inflation, have significantly reduced the demand for these services. Furthermore, the escalation of current geopolitical tensions and retaliatory tariffs is putting pressure on the supply chain and services, leading to increased prices for offerings. In the second quarter of 2025, the cost of revenues went up 8.1% year over year. SG&A expenses increased 3.8%.LH Stock Estimate TrendIn the past 30 days, the Zacks Consensus Estimate for Labcorp’s 2025 earnings has remained unchanged at $16.30.The Zacks Consensus Estimate for 2025 revenues is pegged at $14.00 billion, suggesting a 7.7% improvement from the 2024 comparable figure.Other Key PicksSome other top-ranked stocks in the broader medical space are GE HealthCare Technologies GEHC, Masimo MASI and Phibro Animal Health PAHC.GE HealthCare has an earnings yield of 5.8% compared with the industry’s 0.2%. Shares of the company have surged 76.5% compared with the industry’s 3.4% growth. GEHC’s earnings beat estimates in each of the trailing four quarters, with the average surprise being 12.5%.GEHC carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Masimo, currently carrying a Zacks Rank #2, has an estimated long-term earnings growth rate of 12.5% compared with the industry’s 9.9%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 9.17%. MASI’s shares have rallied 18.9% against the industry’s 15.4% decline in the past year.Phibro, currently carrying a Zacks Rank #2, has an estimated earnings growth rate of 17.2% for fiscal 2026 compared with the S&P 500 composite’s 10.9%. Shares of the company have rallied 101.1% compared with the industry’s 3% growth. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 27.9%.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Labcorp Holdings Inc. (LH): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis Report Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report GE HealthCare Technologies Inc. (GEHC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks