Story updated at 9:50 a.m. to reflect market activity.
Shares of Laboratory Corp. of America gained 2.1% to $100.27 in morning trading.
The firm raised its price target for the company to $112 from $93. The upgrade was driven by the lab industry's successful efforts to push off Medicare CLFS changes until 2017.
Separately, TheStreet Ratings team rates LABORATORY CP OF AMER HLDGS as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LABORATORY CP OF AMER HLDGS (LH) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LABORATORY CP OF AMER HLDGS has improved earnings per share by 13.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LABORATORY CP OF AMER HLDGS increased its bottom line by earning $6.24 versus $5.98 in the prior year. This year, the market expects an improvement in earnings ($6.64 versus $6.24).
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 2.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Health Care Providers & Services industry and the overall market, LABORATORY CP OF AMER HLDGS's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the Health Care Providers & Services industry average, but is less than that of the S&P 500. The net income increased by 5.1% when compared to the same quarter one year prior, going from $120.20 million to $126.30 million.
- You can view the full analysis from the report here: LH Ratings Report