Laboratory Corporation of America (LH) PT Raised to $283 at Morgan Stanley

Morgan Stanley analyst Erin Wright raised the price target on Laboratory Corporation of America (NYSE: LH) to $283.00 (from $270.00) while maintaining a Overweight rating.

The analyst comments "Expecting Durable Higher Core Utilization: LH views that we are potentially in a different utilization environment that will not necessarily return to pre-COVID levels. Following the post-COVID pick up in utilization, it was originally thought that pent up demand was driving growth. Robust volumes have remained more durable, however (consistent with payer commentary), which LH now attributes to strong underlying secular trends that should continue to support these elevated levels. Namely, the aging U.S. population, the rate of disease prevalence increasing, and advances in diagnostics and Specialty testing. Consequently, LH likely can achieve growth at the higher end of its LT +1-2% organic volume growth target with also market share gains and innovation helping it to grow faster than the overall market. We are encouraged by this commentary and await more details on LT prospects at the next Investor Day, potentially at the beginning of 2026. In 2025, LH is calling for +6.5-7.7% Diagnostic revenue growth (50% organic) as it continue to track above LT targets. Unit pricing has been relatively flat, and payer relationships remain strong. Standard contracts are 3-5yrs, and thus 20-25% come up for renewal each year. However, LH is encouraged by the steady price environment. Diagnostic margins are projected to expand in 2025 and are typically stronger in 1H, though this year its Invitae acquisition will turn accretive in 2H, which will help prop 2H margins up slightly vs. historic. "

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