Labcorp initiated with an Outperform at Leerink

Leerink initiated coverage of Labcorp (LH) with an Outperform rating and $260 price target. Following its 2023 spinoff of Fortrea (FTRE), its late-stage contract research organization, or CRO, assets, Labcorp is now more focused on its core clinical lab capabilities, complemented by its central lab and early stage research development efforts. This portfolio simplification should provide more visibility/predictability into operating results along with a tightened capital deployment strategy that should be balanced across buyback/M&A/dividend growth, Leerkin says. The firm sees these factors all leading to a low-double digit growth profile that is not captured in current valuation, providing positive risk/reward potential.