Our Take on 3 Holdings' Earnings (One Could Lead to New Price Target)
Let's review earnings for these Pro Portfolio stocks to gain insights into the companies and see whether they could lead to new targets.
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Between last night and this morning, three of the Pro Portfolio’s holdings – Welltower (WELL) , Waste Management (WM) , and Labcorp (LH) – delivered their latest quarterly results. All three will hold earnings calls this morning, which should shed more light on those results as well as each company’s respective outlook.
Let’s dig into what we have so far…
Waste Management: 2026 Comments Key
With its September-ending quarter earnings per share and revenue of $1.98 and $6.44 billion, quarterly results from Waste Management came up short compared to the consensus figures of $2.01 and $6.5 billion. Added to that, the company also tightened its 2025 revenue to $25.275 billion, the lower end of its prior guidance range of $25.275 billion-$25.475 billion, and the $25.35 billion consensus. Not large misses, but are misses still the same, and as we’ve discussed in recent days, when it comes to the market mood that is poised to weigh on the share this morning.
What drove the miss? Falling recycling commodity prices, which offset the continued strength in Waste’s core collection and disposal business. Continued margin expansion at that core business and the company’s tight rein on cost control led consolidated earnings before interest, taxes, depreciation, and amortization margins to tick higher, but that strength was offset by lower margins at the Healthcare Solutions business. We knew that business was going to be a drag on overall profitability in the near-term as management integrates the business and instills the same focus it has in the core waste business.
Despite the top- and bottom-line miss, Waste reiterated its 2025 EBITDA guidance of $7.475 billion-$7.625 billion with free cash flow between $2.8 billion-$2.9 billion. Where things get interesting is the initial free cash flow guidance of around $3.8 billion in 2026. That’s a big step up and likely reflects benefiting from efforts to trim costs and drive productivity this year in the waste collection business and better margins at the Healthcare Solutions segment.
How much the management discusses 2026 in detail during today’s 10 a.m. ET earnings call will determine the degree to which the reset 2025 guidance will weigh on the shares. Subject to what we learn and where the shares shake out, we have room to add to the Portfolio's position, but at a minimum, we will want to listen and dissect this morning’s earnings call before making any decisions.
Labcorp Bumps Midpoint EPS Guidance
Once again, Labcorp delivered a bottom-line beat for its quarter with EPS of $4.18, a nickel ahead of the market consensus. Revenue for the period rose 8.6% year over year to match the $3.56 billion consensus. Breaking down that revenue stream, organic revenue growth came in at 6.2% with acquisitions driving the bulk of the difference.
The company’s adjusted operating margin rose to 14.4% compared to $13.4% in the year-ago quarter. While that was some very nice improvement, that 14.4% figure compares to the 14.6% one for the first half of 2025. As we think about the company’s updated 2025 EPS guidance, during the earnings call, we’ll be focused on margin prospects for the current quarter. We’ll also be looking for directional ones about margin prospects for next year.
Turning to that updated EPS outlook for this year, the company now sees $16.15-$16.50, which implies a new midpoint of $16.33, up from its June EPS guidance midpoint of $16.275 on the $16.05-$16.50 range. You’ll quickly note that the lifted EPS midpoint figure reflects the company’s EPS beat for the September 2025 quarter, and that suggests the business is playing out as management telegraphed earlier this year.
Labcorp trimmed its 2025 top-line growth forecast to 7.4%-8.0%, down from 7.5%-8.6%, due to currency and acquisition timing. Growth by acquisition has been a steady part of the story for Labcorp, and we’ll want to see how much of that revision is due to timing. Reading between the lines, the increased EPS midpoint and lift the same for expected free cash flow vs. the marginally slower rate of top-line growth points to continued year-over-year margin improvement. That is something we can get behind.
Labcorp will hold its earnings call at 9 a.m. ET this morning.
Welltower Raises 2025 FFO
Last night, Welltower reported normalized funds from operations (FFO) of $1.34 per share, up from $1.11 in the year-ago quarter and topping the $1.30 market consensus. Revenues for the quarter rose 30.7% year over year to $2.69 billion, nicely ahead of the $2.61 billion consensus. Driving that top-line growth was the more than 36% year-over-year jump in resident fees and service revenue, which far outstripped the 16.0% gain in rental income revenue. We can trace the drivers for that fee and service growth to 400 basis points of year-over-year occupancy growth and revenue per occupied room that climbed 4.8%.
Those figures get back to our thesis behind having WELL shares in the Portfolio. As the company expands its footprint to meet the demands of the demographic shift of the Silver Tsunami, we should see continued growth in the core resident fees and services segment. That segment drives more than 75% of Welltower’s overall revenue stream and based on the mix of business thus far in 2025 compared to 2024, it’s fair to say it’s also the highest margin business for the company.
In keeping with the expanding footprint, during the quarter reported, Welltower completed $1.8 billion in acquisitions. After the closing of that quarter, management announced it has already completed $23 billion in transaction activity in the current quarter, comprised of $14 billion in gross investment for the acquisition of seniors housing communities in the U.S. and U.K., and $9 billion in dispositions. On the earnings call, we’ll be looking for more on how this alters the company’s overall footprint and margin profile. We’ll also be interested in how this could impact acquisition activity in the coming quarters.
In terms of guidance, Welltower now expects 2025 normalized FFO per share of $5.24-$5.30, vs. $5.13 consensus and prior guidance of $5.06-$5.14 with same-store net operating income projected to rise 13.2%-14.5%, up from its prior view of 11.25%-13.25%. That suggests some of that $9 billion in dispositions were for lower margin properties.
All in all, we like what we see in Welltower’s results and guidance, and once we have digested the 9 a.m. ET earnings call, we’ll likely need to revise our $190 price target higher. Not a bad problem to have.
The Pro Portfolio at the time of publication is long WELL, WM, LH.
