A month has gone by since the last earnings report for Hologic (HOLX Quick QuoteHOLX - Free Report) . Shares have added about 5.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hologic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Hologic Q3 Earnings Top Estimates, Q4 View Dull

Hologic reported third-quarter fiscal 2021 adjusted earnings per share of $1.33, up 77.3% year over year. The bottom line surpassed the Zacks Consensus Estimate by 19.8%.

The adjustments include charges and benefits related to amortization of acquired intangible assets, MDR expenses, and restructuring and integration/consolidation costs, to name a few.

The company’s GAAP earnings per share was $1.04 in the quarter compared with the year-ago earnings per share of 53 cents, reflecting a stupendous 96.2% improvement.

Revenues in Detail

Revenues grossed $1.17 billion in the reported quarter, up 41.9% year over year (up 37.8% at constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 12.9%.

Organic revenues (excluding divested Blood business and buyouts of Acessa, Biotheranostics Diagenode and Mobidiag) of $1.13 billion increased 38.4% year over year and 34.2% at CER.

U.S. revenues of $749.9 million rose 13.5%, whereas international revenues of $418.4 million improved 158.1% year over year or 137% at CER.

Organically, revenues in the United States rose 10.1% year over year to $719 million in the quarter. International revenues increased 152.5% year over year (up 131.4% at CER) to $409.3 million.

Segments in Detail

Revenues at the Diagnostics segment rose 25% year over year (up 20.3% at CER) to $665.5 million in the quarter under review, with Cytology & Perinatal being the major growth driver. Cytology & Perinatal revenues of $115.9 million climbed 75% at CER. Molecular Diagnostics’ revenues of $536.4 million rose 11.9% at CER. Blood Screening revenues of $13.2 million rose 69.2% year over year at CER.

Revenues at the Breast Health segment improved 55.8% from the year-ago period (up 53.2% at CER) to $349 million. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch. Impressive performances by the segment’s Breast Imaging and interventional businesses also drove the top line.

Domestic sales in this segment improved in the quarter on a 60.2% revenue uptick year over year. Further, outside the United States, Breast Health sales improved 31.1% at CER.

Revenues at the GYN Surgical business rose 148.4% year over year (up 143.4% at CER) to $127.9 million, while revenues at Skeletal Health increased 70.4% year over year (up 66.3% at CER) to $25.9 million.

Operational Update

In the fiscal third quarter, the company-provided adjusted gross margin expanded 140 basis points (bps) to 66.1%. According to the company, the increase in gross margin was largely due to recovery in base businesses.

Adjusted operating expenses, as stated by the company, amounted to $310.1 million, up 18.8% year over year. The company-reported adjusted operating margin expanded 650 bps to 39.5%.

Financial Update

Hologic ended fiscal third-quarter 2021 with cash and cash equivalents of $827.6 million compared with $816.4 million at the end of second-quarter fiscal 2021. Total long-term debt (including current portion) was $2.65 billion at the end of the third quarter of fiscal 2021 compared with $2.71 billion at the end of the second quarter of fiscal 2021.

Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2021 was $1.87 billion compared with $454.6 million a year ago.

Guidance

Hologic has provided the financial guidance for fourth-quarter fiscal 2021 projecting strong growth in its base business, more than offset by declines in COVID-19 testing revenues.

The company projects revenues within $1-$1.04 billion implying a year-over-year decline in the range of 25.8-22.8% on a reported basis, 26.7-23.8% at CER and 29.6-26.6% organically. The Zacks Consensus Estimate for fourth-quarter fiscal 2021 revenues is pegged at $1.03 billion.

Adjusted earnings per share for the quarter is estimated within 92 cents-$1, with projected decline of 55.6-51.7% year over year. The Zacks Consensus Estimate for fourth-quarter fiscal 2021 EPS is pegged at $1.11.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -13.91% due to these changes.

VGM Scores

At this time, Hologic has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hologic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.