Healthcare Positions

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 18 month price target of $287.65 with 2026 EPS of $23.09 and a 15 P/E is a 28.5% upside from today’s price of $223.91. This is driven by:

Dx having 8.1% YoY revenue growth by 2027 (1% more than consensus) due to (1) growth within hospital systems and (2) tests in high demand areas. However, the main variance in our outlook is BLS achieving 17.4% operating margins by 2027 (2.2% greater than current operating margins) due to (1) artificial intelligence making both early development research and testing more efficient and (2) acquisition of cell and gene therapy technology. This margin expansion drives EPS estimates 25% above consensus in 2026


Dx:

(1) Expansion within hospital systems will increase Medicare/Medicaid and Client revenue to 7.9% YoY growth by 2026 (currently 5% and 6.5% respectively) 
There are currently 56 million people enrolled in Medicare and there will be over 80 million by 2031.

(2) LH will focus on 4 specialty areas that will grow 2-3x the rate of the typical diagnostic growth rate: oncology, women's health, autoimmune and neurology.

BLS:

(1) Innovative acquisitions will drive Early Development Research revenue to grow from -6.4% in 2024 to 5% in 2026.

(2) Cost as a percentage of revenue for the BLS segment will drop from 86% in 2024 to 82% in 2026 as artificial intelligence continues to make the drug discovery process more efficient.

 Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.