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Here's Why You Should Retain Hologic (HOLX) Stock for Now
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Hologic, Inc. (HOLX - Free Report) has been gaining from an impressive performance by the Breast Imaging and Interventional Breast Solutions businesses. The recently-completed buyout of Bolder Surgical and the Panther Trax launch bode well for the company. However, escalating expenses and forex woes do not bode well.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 13.3% compared with the 12.9% fall of the industry and 13.7% rise of the S&P 500.
The renowned medical device company has a market capitalization of $17.99 billion. Over the past five years, the company’s earnings have registered a 34.1% increase, way ahead of the industry’s 5.1% rise. The company’s long-term expected growth is estimated at 12.8%, compared with the industry’s growth expectation of 15.9% and the S&P 500’s estimated 14.6% growth.
Key Growth Drivers
Strength in Breast Health: Hologic has been making impressive progress in its Breast Health arm over the past few months. The company is currently focusing on expanding its strategy to diversify business across the patient continuum of care. It has also launched new software products based on its investments in artificial intelligence and has strengthened its interventional franchise via the Brevera relaunch.
Revenues at the Breast Health segment improved 8% from the year-ago period (up 8.4% at CER) in the fiscal first quarter. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch.
Strength in GYN Surgical: Over the past two years, the GYN Surgical business has transformed to the most profitable division of Hologic on a percentage basis, banking on new leadership, strong strategic execution of new commercial models and product launches.
Image Source: Zacks Investment Research
In November 2021, Hologic acquired Bolder Surgical. The acquisition will add laparoscopic vessel sealing, dividing and dissecting devices to Hologic’s portfolio and allow it to expand the use of Bolder Surgical’s devices to OB/GYN specialists. With the addition of the Acessa procedure and the completion of the Bolder acquisition, Hologic’s surgical business is well-positioned for growth. During the first quarter, Acessa revenues grew nearly three times compared to the year-ago period.
Focus on International Operations: According to Hologic, the global expansion will be a critical element of its growth strategy over the long term. The company’s international sales have been a major catalyst over the past three years, with the major driver being the molecular diagnostics business. During the first quarter of fiscal 2022, the international business registered 13% organic growth. Hologic is increasingly focusing on commercial infrastructure. The company has been progressing impressively with respect to the placement of Panther instruments across the globe.
Downsides
Foreign Exchange Headwinds: We are worried about the significant challenges Hologic faced due to the unfavorable foreign currency impact that has affected the company’s overall performance in the past few quarters.
Rising Costs: During the fiscal first quarter, adjusted operating expenses, as stated by the company, rose 21.6% year over year. The company reported an adjusted operating margin contraction of 1080 basis points to 49.4%.
Estimate Trend
Over the past 90 days, the Zacks Consensus Estimate for Hologic’s fiscal 2022 earnings has moved 37.8 % north to $5.10.
The Zacks Consensus Estimate for its fiscal 2022 revenues is pegged at $1.28 billion, suggesting a 17.1% fall from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16.2%. AMN Healthcare surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #2.
Henry Schein has gained 6.1% compared with the industry’s 1.7% rise over the past year.
West Pharmaceutical has a long-term earnings growth rate of 27.6%. West Pharmaceutical surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed its industry over the past year. WST currently carries a Zacks Rank of 2.
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Here's Why You Should Retain Hologic (HOLX) Stock for Now
Hologic, Inc. (HOLX - Free Report) has been gaining from an impressive performance by the Breast Imaging and Interventional Breast Solutions businesses. The recently-completed buyout of Bolder Surgical and the Panther Trax launch bode well for the company. However, escalating expenses and forex woes do not bode well.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 13.3% compared with the 12.9% fall of the industry and 13.7% rise of the S&P 500.
The renowned medical device company has a market capitalization of $17.99 billion. Over the past five years, the company’s earnings have registered a 34.1% increase, way ahead of the industry’s 5.1% rise. The company’s long-term expected growth is estimated at 12.8%, compared with the industry’s growth expectation of 15.9% and the S&P 500’s estimated 14.6% growth.
Key Growth Drivers
Strength in Breast Health: Hologic has been making impressive progress in its Breast Health arm over the past few months. The company is currently focusing on expanding its strategy to diversify business across the patient continuum of care. It has also launched new software products based on its investments in artificial intelligence and has strengthened its interventional franchise via the Brevera relaunch.
Revenues at the Breast Health segment improved 8% from the year-ago period (up 8.4% at CER) in the fiscal first quarter. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch.
Strength in GYN Surgical: Over the past two years, the GYN Surgical business has transformed to the most profitable division of Hologic on a percentage basis, banking on new leadership, strong strategic execution of new commercial models and product launches.
In November 2021, Hologic acquired Bolder Surgical. The acquisition will add laparoscopic vessel sealing, dividing and dissecting devices to Hologic’s portfolio and allow it to expand the use of Bolder Surgical’s devices to OB/GYN specialists. With the addition of the Acessa procedure and the completion of the Bolder acquisition, Hologic’s surgical business is well-positioned for growth. During the first quarter, Acessa revenues grew nearly three times compared to the year-ago period.
Focus on International Operations: According to Hologic, the global expansion will be a critical element of its growth strategy over the long term. The company’s international sales have been a major catalyst over the past three years, with the major driver being the molecular diagnostics business. During the first quarter of fiscal 2022, the international business registered 13% organic growth. Hologic is increasingly focusing on commercial infrastructure. The company has been progressing impressively with respect to the placement of Panther instruments across the globe.
Downsides
Foreign Exchange Headwinds: We are worried about the significant challenges Hologic faced due to the unfavorable foreign currency impact that has affected the company’s overall performance in the past few quarters.
Rising Costs: During the fiscal first quarter, adjusted operating expenses, as stated by the company, rose 21.6% year over year. The company reported an adjusted operating margin contraction of 1080 basis points to 49.4%.
Estimate Trend
Over the past 90 days, the Zacks Consensus Estimate for Hologic’s fiscal 2022 earnings has moved 37.8 % north to $5.10.
The Zacks Consensus Estimate for its fiscal 2022 revenues is pegged at $1.28 billion, suggesting a 17.1% fall from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16.2%. AMN Healthcare surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #2.
Henry Schein has gained 6.1% compared with the industry’s 1.7% rise over the past year.
West Pharmaceutical has a long-term earnings growth rate of 27.6%. West Pharmaceutical surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed its industry over the past year. WST currently carries a Zacks Rank of 2.