DCF Studio

    LH · NYQ · Healthcare

    Labcorp Holdings Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 160.02

    Market price

    USD 320.71

    Implied upside

    -50.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 160.02-50.1%
    Exit multiple
    USD 324.94+1.3%
    Market price
    USD 320.71

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 14.7bnUSD 15.5bnUSD 16.4bnUSD 17.3bnUSD 18.3bn+5.6%
    EBITUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+5.6%
    NOPATUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bn+5.6%
    Add depreciation & amortisationUSD 703.3mUSD 742.4mUSD 783.6mUSD 827.1mUSD 873.0m+5.6%
    Less capital expenditureUSD -523.8mUSD -552.9mUSD -583.6mUSD -616.0mUSD -650.2m+5.6%
    Less increase in working capitalUSD -432.2mUSD -456.2mUSD -481.6mUSD -508.3mUSD -536.5m+5.6%
    Free cashflow to firmUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.3bn+5.6%
    Discount factor0.95890.88180.81090.74570.6857-
    Present valueUSD 974.3mUSD 945.7mUSD 917.9mUSD 891.0mUSD 864.8m-2.9%
    Present Value Of The ForecastUSD 4.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.900Reported 0.851, pulled toward 1.0 (Blume)
    Cost of equity9.95%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 26.0bn79.9% of capital
    Total debtUSD 6.5bn20.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.75%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 160.02

    76% of EV

    Forecast FCFF, final year
    USD 1.3bn
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (28.6% of NOPAT)
    USD -526.8m
    Capitalised
    USD 1.3bn
    ROIC (WACC floor)
    8.7%
    Terminal value, undiscounted
    USD 21.6bn
    Terminal value, discounted
    USD 14.8bn
    Enterprise value
    USD 19.4bn
    Less net debt
    USD 6.0bn
    Equity value
    USD 13.4bn

    Exit at 14.6x EBITDA

    Value per shareUSD 324.94

    86% of EV

    Terminal value, undiscounted
    USD 41.8bn
    Terminal value, discounted
    USD 28.6bn
    Enterprise value
    USD 33.2bn
    Less net debt
    USD 6.0bn
    Equity value
    USD 27.2bn

    Spread between methods: 68%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.75%240.85246.08252.28259.85269.43
    7.75%190.54191.55192.56193.58194.59
    8.75%158.30159.16160.02160.88161.75
    9.75%132.80133.54134.28135.02135.77
    10.75%112.14112.79113.44114.08114.73

    Outlined: this model. Green text: above today's price of 320.71. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year5.6%24.9%+19.3pp
    EBIT margin10.9%18.9%+8.0pp
    Discount rate8.7%6.0%-2.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.