Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Labcorp Holdings Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.2% to -12.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 65, DPO 33, DIO 19). At a 6.9% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $372.76 per share, suggesting LH is undervalued by 38.5% at the current price of $269.18.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,884 | 1,976 | 2,077 | 2,227 | 1,955 | 2,004 |
| (−) Net Interest | 234 | 245 | 258 | 277 | 243 | 249 |
| (+) D&A | 464 | 479 | 494 | 521 | 549 | 563 |
| EBITDA | 2,583 | 2,700 | 2,830 | 3,024 | 2,747 | 2,816 |
| (−) Tax | 448 | 470 | 494 | 529 | 465 | — |
| (−) CapEx | 533 | 559 | 588 | 630 | 553 | — |
| (−) ΔWC | 266 | 108 | 120 | 176 | -320 | — |
| Free Cash Flow (FCF) | 1,335 | 1,563 | 1,628 | 1,689 | 2,049 | — |
| Peers' EBITDA Multiple | 15.3x | |||||
| Terminal Value | 43,220 | |||||
| WACC / Discount Rate | 6.89% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,291 | 1,415 | 1,378 | 1,337 | 1,518 | 30,969 |
| Enterprise Value | 37,908 | |||||
| Projection Period | 6,940 | 18.3% | ||||
| Terminal Value | 30,969 | 81.7% | ||||
| (−) Current Net Debt | 6,672 | |||||
| Equity Value | 31,236 | |||||
| (÷) Outstanding Shares | 84M | |||||
| Fair Price | $373 | +38.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.4x | 13.4x | 15.4x | 17.4x | 19.4x |
|---|---|---|---|---|---|
| 4.9% | $308 | $361 | $413 | $466 | $519 |
| 5.9% | $292 | $342 | $393 | $443 | $493 |
| 6.9% | $276 | $325 | $373 | $421 | $469 |
| 7.9% | $262 | $308 | $354 | $400 | $446 |
| 8.9% | $248 | $292 | $336 | $380 | $424 |
Current price: $269.18. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.