Laboratory Corp. of America (LH) and CareDx (CDNA) Critical Review

Laboratory Corp. of America (NYSE: LH) and CareDx (NASDAQ:CDNA) are both medical companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Volatility & Risk

Laboratory Corp. of America has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, CareDx has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500.

Valuation and Earnings

This table compares Laboratory Corp. of America and CareDx’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Laboratory Corp. of America $10.44 billion 1.80 $1.27 billion $9.60 19.26
CareDx $48.32 million 10.86 -$55.46 million ($0.77) -19.32

Laboratory Corp. of America has higher revenue and earnings than CareDx. CareDx is trading at a lower price-to-earnings ratio than Laboratory Corp. of America, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Laboratory Corp. of America and CareDx, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Laboratory Corp. of America 0 3 12 1 2.88
CareDx 0 0 4 0 3.00

Laboratory Corp. of America presently has a consensus price target of $192.31, indicating a potential upside of 4.17%. CareDx has a consensus price target of $11.88, indicating a potential downside of 20.30%. Given Laboratory Corp. of America’s higher possible upside, analysts plainly believe Laboratory Corp. of America is more favorable than CareDx.

Profitability

This table compares Laboratory Corp. of America and CareDx’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Laboratory Corp. of America 11.52% 16.33% 6.49%
CareDx -115.91% -158.93% -19.78%

Institutional & Insider Ownership

92.3% of Laboratory Corp. of America shares are owned by institutional investors. Comparatively, 52.1% of CareDx shares are owned by institutional investors. 0.7% of Laboratory Corp. of America shares are owned by insiders. Comparatively, 3.4% of CareDx shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Laboratory Corp. of America beats CareDx on 12 of the 15 factors compared between the two stocks.

Laboratory Corp. of America Company Profile

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide. It operates through two segments, LabCorp Diagnostics and Covance Drug Development. It offers a range of clinical laboratory tests, such as blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, Pap tests, hemoglobin A1C, prostate-specific antigen, tests for sexually-transmitted diseases, hepatitis C tests, vitamin D, microbiology cultures and procedures, and alcohol and other substance-abuse tests that are used by hospitals, physicians and other healthcare providers and commercial clients to assist in the diagnosis, monitoring and treatment of diseases and medical conditions through the examination of substances in blood, tissues, and other specimens. The company also provides specialty testing services in the areas of women's health, allergy, diagnostic genetics, cardiovascular disease, infectious disease, endocrinology, oncology, coagulation, pharmacogenetics, toxicology, medical drug monitoring, and pain management; and esoteric testing, cancer diagnostics, and other complex procedures. In addition, it provides drug development solutions and laboratory testing services; and testing services through a sales force to the managed care organizations, biopharmaceutical companies, governmental agencies, physicians and other healthcare providers, hospitals and health systems, employers, patients and consumers, contract research organizations, food and nutritional companies, and independent clinical laboratories. The company has collaboration with university, hospital and academic institutions, such as Boston University, Columbia University, Duke University, Johns Hopkins University, The Mount Sinai Hospital, the University of Tennessee, and Yale University to license and commercialize new diagnostic tests. Laboratory Corporation of America Holdings was founded in 1971 and is headquartered in Burlington, North Carolina.

CareDx Company Profile

CareDx, Inc., a transplant diagnostics company, together with its subsidiaries, engages in the discovery, development, and commercialization of diagnostic surveillance solutions for transplant patients worldwide. It operates through two segments, Post-Transplant Diagnostics and Pre-Transplant Diagnostics. The Post-Transplant Diagnostics segment develops and provides a diagnostic surveillance testing solution for heart and kidney transplant recipients. It offers AlloMap, a heart transplant molecular test; and AlloSure, a donor-derived cell free DNA test initially used for kidney transplant patients. The Pre-Transplant Diagnostics segment develops, manufactures, markets, and sells products that increase the chance of successful transplants by facilitating a match between a donor and a recipient of stem cells and organs. It sells Olerup SSP, which is used to type human leukocyte antigen (HAL) alleles based on sequence-specific primer technology; Olerup QTYPE, a test kit for sequence based HLA typing; Olerup SBT, a test kit for sequence based HLA typing; and XM-ONE, a test that identifies a patient's antigens against HLA Class I or Class II, as well as antibodies against a donor's endothelium. This segment offers its products directly to customers, as well as through third-party distributors. The company was formerly known as XDx, Inc. and changed its name to CareDx, Inc. in March 2014. CareDx, Inc. was incorporated in 1998 and is headquartered in Brisbane, California.

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