Deutsche Bank Defends Laboratory Corp. Of America Following Covance Deal

Laboratory Corp. of America Holdings LH shares are reacting negatively to the news that it is acquiring Covance Inc. CVD, with LabCorp trading down nearly 8 percent at $100.91.

Darren Lehrich of Deutsche Bank is out in defense of the stock, saying the market is too negative on the deal and raised his price target from $116 to $120 while maintaining a Buy rating.

In his note, Lehrich said, "While Q-to-Q rev volatility in the CRO business could detract from LH's multiple, the earnings/CF from this deal should allow LH to re-rate, over time, as investors gain appreciation for the strategic opportunities this deal should present. As such, we defend Buy and raise PT to $120 (from $116) as we believe deal provides upside risk to ests."

Shares of Covance were trading 25 percent higher at $100.28.