LabCorp (Laboratory Croporation of America) shares of stock fell more than 2% on Tuesday, March 23rd after a Deutsche Bank analyst downgraded the company’s stock (NYSE: LH) from “buy” to “hold.” LabCorp is the second largest US commercial reference lab. One of the key factors cited for this change was lower than expected First Quarter volume. Physician office visits have been below the trend line for the first two months of 2010 and physician offices are responsible for a significant percentage of LabCorp’s test volume. It is estimated that for every 1% increase in the unemployment rate, 2.5 million Americans lose their health care benefits.
Other factors influencing the recommendation were weather, intensifying competition and possible pricing pressures from public payors. The analysts reported that “Downside risks: competition, Medicare / Medicaid / VA cuts, weak demand. Upside risks: accretive M&A and share buyback, higher volume growth.”