Should You Continue to Hold Labcorp Stock in Your Portfolio?

Labcorp Holdings Inc. LH, or Labcorp, is set to benefit from the expansion of its testing capabilities in strategic high-growth areas, including neurology and autoimmune disease. The company’s efforts to enhance its partnership with hospitals and health care systems have strengthened its footprint in important markets. Solid financial health also adds to the stock’s appeal. Yet, broader economic pressures and reimbursement-related headwinds may weigh on its results.

Over the past year, this Zacks Rank #3 (Hold) stock has risen 21.9% compared with the 13.4% growth of the industry and a 20.8% rise of the S&P 500 composite.

The renowned healthcare diagnostics company has a market capitalization of $27.28 billion. Labcorp’s earnings yield of 5.4% favorably compares with the industry’s 3.9% yield. In the trailing four quarters, the company delivered an average earnings surprise of 3.1%.

Let’s delve deeper.

Tailwinds for Labcorp

Targeted Development in High-Growth Areas: Labcorp continues to expand in specialty testing areas such as oncology, women’s health, autoimmune disease and neurology. These areas delivered double-digit revenue growth during the first half of 2026 and helped the company win new health-system and provider customers.

In oncology, Labcorp launched ColoSense nationwide, expanded companion diagnostic access for prostate cancer and added an advanced DPYD genotyping test. It also entered into a clinical trial collaboration to evaluate Plasma Detect Genome MRD in patients at risk of early-stage lung cancer recurrence. The consumer business maintained double-digit growth, supported by Labcorp OnDemand, Marker by Labcorp and new at-home testing options. Specialty patients also tend to require more tests over time, supporting continued growth in tests per accession and favorable mix.

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Strategic Acquisitions and Partnerships to Drive Growth: Labcorp continues to build relationships with health systems and regional laboratories, expanding its patient network and access to specialty testing. During the second quarter of 2026, the company completed acquisitions of select Parkview Health outreach laboratory services and Tribal Diagnostics. It also secured another Department of Defense contract to provide testing across military hospitals worldwide.

Net acquisitions added 1.2% to enterprise revenue growth and 1.9% to Diagnostics growth during the quarter. The expanded collaboration with Epic also places more than 6,500 Labcorp tests on the Aura platform, simplifying access for healthcare providers and supporting deeper integration with health-system customers.

Solvency, Buybacks and Dividends: Labcorp ended the second quarter of 2026 with cash and cash equivalents of $141.8 million. Short-term borrowings and the current portion of long-term debt were $0.9 million, much lower than the cash level. The company also retired $500 million of senior notes during the quarter. Labcorp repurchased $353.8 million of stock and paid $58.7 million in dividends during the second quarter. In July 2026, the board increased the share-repurchase authorization by $1 billion, bringing the remaining authorization to $1.4 billion.

What Ails Labcorp?

Macroeconomic and Cost Risks: Labcorp depends on testing demand from patients, physicians, hospitals and biopharmaceutical customers. Economic volatility, inflation, geopolitical disruption and tariffs can affect customer spending, supply costs and laboratory operations. The cost of revenues increased 5.6% year over year in the second quarter of 2026 and 5.4% during the first half. Although margins expanded, continued cost inflation could require further productivity gains or pricing actions to protect profitability. The biopharmaceutical business also remains exposed to changes in research budgets, study timing and customer funding, particularly within smaller biotech companies and Early Development programs.

Reimbursement and Cash Flow Constraints: Changes in government and third-party reimbursement remain a risk for the Diagnostics arm. Management estimated that Affordable Care Act-related changes reduced second-quarter 2026 diagnostic volume by 20-30 basis points and continues to assume a 30-basis-point full-year impact. The affected payer group represents less than 4-5% of diagnostic volume, but further coverage changes could weaken utilization or collections.

LH Stock Estimate Trend

In the past 30 days, the Zacks Consensus Estimate for Labcorp’s 2026 earnings per share (EPS) has edged up 1.6% to $18.28.

The Zacks Consensus Estimate for 2026 revenues is pegged at $14.75 billion, implying 5.7% growth relative to the 2025 figure.

Key Picks

Some better-ranked stocks in the broader medical space are Globus Medical GMED, Veracyte VCYT and Teleflex TFX.

Globus Medical has an earnings yield of 5.8% compared to the industry’s negative 1.7% yield. Its earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 27.9%. GMED shares have rallied 37% against the industry’s 2.7% decline over the past year.

GMED sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veracyte, sporting a Zacks Rank #1, has an earnings yield of 4.6% against the industry’s negative 1.7% yield. Shares of the company have risen 40.3% against the industry’s 2.7% decline. VCYT’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 41.8%. 

Teleflex, carrying a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 20.7% compared with the industry’s 12.8% growth. Its earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 3.2%. TFX shares have rallied 8.5% against the industry’s 2.7% decline over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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